MPLX LP - Quarter Report: 2021 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

____________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35714

_____________________________________________

MPLX LP

(Exact name of registrant as specified in its charter)

_____________________________________________

Delaware

27-0005456

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

200 E. Hardin Street,

Findlay,

Ohio

45840

(Address of principal executive offices)

(Zip code)

(419) 421-2414

(Registrant’s telephone number, including area code)

_____________________________________________


Securities Registered pursuant to Section 12(b) of the Act
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Units Representing Limited Partnership Interests	MPLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No x

MPLX LP had 1,025,624,328 common units outstanding at July 30, 2021.

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			Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income (Unaudited)			3
Consolidated Statements of Comprehensive Income (Unaudited)			4
Consolidated Balance Sheets (Unaudited)			5
Consolidated Statements of Cash Flows (Unaudited)			6
Consolidated Statements of Equity (Unaudited)			7
Notes to Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
Item 3. Quantitative and Qualitative Disclosures about Market Risk			58
Item 4. Controls and Procedures			59

PART II – OTHER INFORMATION
Item 1. Legal Proceedings			60
Item 1A. Risk Factors			60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61

Item 6. Exhibits			62
Signatures			63

Unless the context otherwise requires, references in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “our,” “us,” or like terms refer to MPLX LP and its subsidiaries. Additionally, throughout this Quarterly Report on Form 10-Q, we have used terms in our discussion of the business and operating results that have been defined in our Glossary of Terms.

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Glossary of Terms

The abbreviations, acronyms and industry technology used in this report are defined as follows.



ASC			Accounting Standards Codification
ASU			Accounting Standards Update

Barrel			One stock tank barrel, or 42 United States gallons of liquid volume, used in reference to crude oil or other liquid hydrocarbons

Bcf/d			One billion cubic feet per day
Btu			One British thermal unit, an energy measurement
Condensate			A natural gas liquid with a low vapor pressure mainly composed of propane, butane, pentane and heavier hydrocarbon fractions
DCF (a non-GAAP financial measure)			Distributable Cash Flow

EBITDA (a non-GAAP financial measure)			Earnings Before Interest, Taxes, Depreciation and Amortization


FASB			Financial Accounting Standards Board
GAAP			Accounting principles generally accepted in the United States of America




LIBOR			London Interbank Offered Rate
mbpd			Thousand barrels per day
Merger			MPLX acquisition by merger of Andeavor Logistics LP (“ANDX”) on July 30, 2019
MMBtu			One million British thermal units, an energy measurement
MMcf/d			One million cubic feet of natural gas per day
NGL			Natural gas liquids, such as ethane, propane, butanes and natural gasoline
NYSE			New York Stock Exchange



Realized derivative gain/loss			The gain or loss recognized when a derivative matures or is settled
SEC			United States Securities and Exchange Commission
Unrealized derivative gain/loss			The gain or loss recognized on a derivative due to changes in fair value prior to the instrument maturing or settling
VIE			Variable interest entity
Wholesale Exchange			The transfer to MPC of the Western wholesale distribution business, which MPLX acquired as a result of its acquisition of ANDX, on July 31, 2020.

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Part I—Financial Information

Item 1. Financial Statements

MPLX LP

Consolidated Statements of Income (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per unit data)	2021		2020		2021		2020
Revenues and other income:
Service revenue	$	578	$	563	$	1,167	$	1,175
Service revenue - related parties	907		857		1,779		1,785
Service revenue - product related	76		22		153		61
Rental income	99		98		198		194
Rental income - related parties	168		237		410		471
Product sales	304		120		586		289
Product sales - related parties	31		30		73		63

Sales-type lease revenue - related parties	136		38		173		76
Income/(loss) from equity method investments(1)	66		89		136		(1,095)
Other income	3		2		4		3
Other income - related parties	27		25		55		51
Total revenues and other income	2,395		2,081		4,734		3,073
Costs and expenses:
Cost of revenues (excludes items below)	293		315		566		683
Purchased product costs	338		87		614		222
Rental cost of sales	32		33		64		68
Rental cost of sales - related parties	23		41		62		87
Purchases - related parties	297		280		595		556
Depreciation and amortization	318		321		647		646
Impairment expense	42		—		42		2,165
General and administrative expenses	87		96		173		193

Other taxes	34		30		66		61
Total costs and expenses	1,464		1,203		2,829		4,681
Income/(loss) from operations	931		878		1,905		(1,608)
Related party interest and other financial costs	2		1		2		4
Interest expense (net of amounts capitalized of $5 million, $10 million, $10 million and $23 million respectively)	195		206		393		417
Other financial costs	19		16		46		32
Income/(loss) before income taxes	715		655		1,464		(2,061)
Provision for income taxes	—		—		1		—
Net income/(loss)	715		655		1,463		(2,061)
Less: Net income attributable to noncontrolling interests	9		7		18		15

Net income/(loss) attributable to MPLX LP	706		648		1,445		(2,076)
Less: Series A preferred unit distributions	21		21		41		41
Less: Series B preferred unit distributions	10		10		21		21

Limited partners’ interest in net income/(loss) attributable to MPLX LP	$	675	$	617	$	1,383	$	(2,138)
Per Unit Data (See Note 6)
Net income/(loss) attributable to MPLX LP per limited partner unit:
Common - basic	$	0.66	$	0.58	$	1.34	$	(2.02)
Common - diluted	$	0.66	$	0.58	$	1.34	$	(2.02)
Weighted average limited partner units outstanding:
Common - basic	1,029		1,059		1,033		1,059
Common - diluted	1,029		1,059		1,033		1,059

(1) The three and six months ended June 30, 2021 includes $6 million of impairment expense. The six months ended June 30, 2020 includes $1,264 million of impairment expense.

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Net income/(loss)	$	715	$	655	$	1,463	$	(2,061)
Other comprehensive income/(loss), net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	—		—		(2)		(1)
Comprehensive income/(loss)	715		655		1,461		(2,062)
Less comprehensive income attributable to:
Noncontrolling interests	9		7		18		15

Comprehensive income/(loss) attributable to MPLX LP	$	706	$	648	$	1,443	$	(2,077)

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Balance Sheets (Unaudited)


(In millions)	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	8	$	15

Receivables, net	538		452
Current assets - related parties	614		677
Inventories	126		118
Assets held for sale	—		188
Other current assets	46		65
Total current assets	1,332		1,515
Equity method investments	4,033		4,036
Property, plant and equipment, net	20,352		21,218
Intangibles, net	896		959
Goodwill	7,657		7,657
Right of use assets, net	297		309
Noncurrent assets - related parties	1,144		672
Other noncurrent assets	62		48
Total assets	35,773		36,414
Liabilities
Current liabilities:
Accounts payable	158		152
Accrued liabilities	258		194



Current liabilities - related parties	812		356
Accrued property, plant and equipment	54		84

Long-term debt due within one year	1		764
Accrued interest payable	203		222
Operating lease liabilities	63		63
Liabilities held for sale	—		101
Other current liabilities	178		150
Total current liabilities	1,727		2,086
Long-term deferred revenue	349		314
Long-term liabilities - related parties	306		283
Long-term debt	19,234		19,375
Deferred income taxes	11		12
Long-term operating lease liabilities	232		244
Deferred credits and other liabilities	151		115
Total liabilities	22,010		22,429
Commitments and contingencies (see Note 21)
Series A preferred units	968		968
Equity
Common unitholders - public (380 million and 391 million units issued and outstanding)	9,061		9,384

Common unitholders - MPC (647 million and 647 million units issued and outstanding)	2,897		2,792


Series B preferred units (.6 million and .6 million units issued and outstanding)	611		611

Accumulated other comprehensive loss	(17)		(15)
Total MPLX LP partners’ capital	12,552		12,772
Noncontrolling interests	243		245
Total equity	12,795		13,017
Total liabilities, preferred units and equity	$	35,773	$	36,414

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
(In millions)	2021		2020
Increase/(decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net income/(loss)	$	1,463	$	(2,061)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Amortization of deferred financing costs	35		29
Depreciation and amortization	647		646
Impairment expense	42		2,165
Deferred income taxes	(1)		(1)

Loss on disposal of assets	1		1
(Income)/loss from equity method investments(1)	(136)		1,095
Distributions from unconsolidated affiliates	239		226
Changes in:
Current receivables	(83)		31
Inventories	(8)		(7)
Fair value of derivatives	39		(9)
Current accounts payable and accrued liabilities	77		(102)
Current assets/current liabilities - related parties	101		27

Right of use assets/operating lease liabilities	1		(1)
Deferred revenue	43		49
All other, net	29		26
Net cash provided by operating activities	2,489		2,114
Investing activities:
Additions to property, plant and equipment	(235)		(708)

Disposal of assets	74		43

Investments in unconsolidated affiliates	(84)		(222)

Distributions from unconsolidated affiliates - return of capital	—		110

Net cash used in investing activities	(245)		(777)
Financing activities:
Long-term debt - borrowings	2,800		2,500
- repayments	(3,746)		(1,682)
Related party debt - borrowings	4,435		2,708
- repayments	(3,942)		(3,302)


Unit repurchases	(310)		—




Distributions to noncontrolling interests	(20)		(17)
Distributions to Series A preferred unitholders	(41)		(41)
Distributions to Series B preferred unitholders	(21)		(21)
Distributions to unitholders and general partner	(1,421)		(1,445)

Contributions from MPC	17		20

All other, net	(2)		(5)
Net cash used in financing activities	(2,251)		(1,285)
Net (decrease)/increase in cash, cash equivalents and restricted cash	(7)		52
Cash, cash equivalents and restricted cash at beginning of period	15		15
Cash, cash equivalents and restricted cash at end of period	$	8	$	67

(1) The 2021 period includes $6 million of impairment expense. The 2020 period includes $1,264 million of impairment expense.

The accompanying notes are an integral part of these consolidated financial statements.

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MPLX LP

Consolidated Statements of Equity (Unaudited)


	Partnership
(In millions)	Common Unit-holders Public		Common Unit-holder MPC		Series B Preferred Unit-holders		Accumulated Other Comprehensive Loss		Non-controlling Interests		Total














































Balance at December 31, 2019	$	10,800	$	4,968	$	611	$	(15)	$	249	$	16,613
Net (loss)/income (excludes amounts attributable to preferred units)	(1,022)		(1,733)		11		—		8		(2,736)
Distributions to:
Unitholders	(271)		(446)		(21)		—		—		(738)
Noncontrolling interests	—		—		—		—		(9)		(9)
Contributions from:
MPC	—		225		—		—		—		225

Other	2		—		—		(1)		—		1
Balance at March 31, 2020	9,509		3,014		601		(16)		248		13,356

Net income (excludes amounts attributable to preferred units)	229		388		10		—		7		634


Distributions to:

Unitholders	(270)		(458)		—		—		—		(728)
Noncontrolling interests	—		—		—		—		(8)		(8)
Contributions from:
MPC	—		6		—		—		—		6


Other	1		1		—		—		—		2


Balance at June 30, 2020	9,469		2,951		611		(16)		247		13,262


















Balance at December 31, 2020	9,384		2,792		611		(15)		245		13,017

Net income (excludes amounts attributable to preferred units)	266		443		11		—		9		729
Unit Repurchases	(155)		—		—		—		—		(155)

Distributions to:

Unitholders	(269)		(445)		(21)		—		—		(735)
Noncontrolling interests	—		—		—		—		(10)		(10)
Contributions from:
MPC	—		7		—		—		—		7


Other	—		(1)		—		(2)		—		(3)







Balance at March 31, 2021	9,226		2,796		601		(17)		244		12,850

Net income (excludes amounts attributable to preferred units)	251		423		10		—		9		693
Unit Repurchases	(155)		—		—		—		—		(155)

Distributions to:

Unitholders	(262)		(445)		—		—		—		(707)
Noncontrolling interests	—		—		—		—		(10)		(10)
Contributions from:
MPC	—		122		—		—		—		122


Other	1		1		—		—		—		2







Balance at June 30, 2021	$	9,061	$	2,897	$	611	$	(17)	$	243	$	12,795

The accompanying notes are an integral part of these consolidated financial statements.

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Notes to Consolidated Financial Statements (Unaudited)

1. Description of the Business and Basis of Presentation

Description of the Business – MPLX LP is a diversified, large-cap master limited partnership formed by Marathon Petroleum Corporation that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. References in this report to “MPLX LP,” “MPLX,” “the Partnership,” “we,” “ours,” “us,” or like terms refer to MPLX LP and its subsidiaries. References to “MPC” refer collectively to Marathon Petroleum Corporation as our sponsor and its subsidiaries, other than the Partnership. We are engaged in the transportation, storage and distribution of crude oil, asphalt and refined petroleum products; the gathering, processing and transportation of natural gas; and the gathering, transportation, fractionation, storage and marketing of NGLs. MPLX’s principal executive office is located in Findlay, Ohio.

MPLX’s business consists of two segments based on the nature of services it offers: Logistics and Storage (“L&S”), which relates primarily to crude oil, asphalt and refined petroleum products; and Gathering and Processing (“G&P”), which relates primarily to natural gas and NGLs. See Note 9 for additional information regarding the operations and results of these segments.

On July 31, 2020, MPLX completed the exchange of Western Refining Wholesale, LLC (“WRW”) to Western Refining Southwest, Inc. (now known as Western Refining Southwest LLC) (“WRSW”), a wholly owned subsidiary of MPC, in exchange for the redemption of 18,582,088 MPLX common units held by WRSW (the “Wholesale Exchange”). See Note 3 for additional information regarding the Wholesale Exchange. These financial statements include the results of WRSW through July 31, 2020.

Impairments – During the first half of 2021, we continued to see improvements in the environment in which our business operates as COVID-19 impacts continue to subside. The increased availability of vaccinations and easing of COVID-19 restrictions has been followed by an increase in economic activity, however, we are unable to predict the potential effects a resurgence of COVID-19 may have on our financial position and results.

In the second quarter of 2021, we recognized impairment expense of $42 million within our G&P segment related to our continued emphasis on portfolio optimization with the anticipated divestiture of several non-core assets and the closure of other non-core assets.

During the first quarter of 2020, the overall deterioration in the economy and the environment in which MPLX and its customers operate, as well as a sustained decrease in unit price, were considered triggering events at that time resulting in impairments of the carrying value of certain assets. We recognized impairments related to goodwill, certain equity method investments and certain long-lived assets (including intangibles), within our G&P segment. Many of our producer customers refined and updated production forecasts in response to the environment at that time, which impacted their expected future demand for our services, including the future utilization of our assets. Additionally, certain of our contracts have commodity price exposure, including NGL prices, which experienced increased volatility as noted above. The table below provides information related to the impairments recognized during the first quarter of 2020 as well as the corresponding footnote where additional information can be found.


(In millions)	Impairment		Footnote Reference
Goodwill	$	1,814	12
Equity method investments	1,264		4
Intangibles, net	177		12
Property, plant and equipment, net	174		11
Total impairments	$	3,429

Basis of Presentation – The accompanying interim consolidated financial statements are unaudited; however, in the opinion of MPLX’s management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal, recurring nature unless otherwise disclosed. These interim consolidated financial statements, including the notes, have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements. Certain amounts in prior years have been reclassified to conform to current year presentation.

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These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year.

MPLX’s consolidated financial statements include all majority-owned and controlled subsidiaries. For non-wholly owned consolidated subsidiaries, the interests owned by third parties have been recorded as “Noncontrolling interests” on the accompanying Consolidated Balance Sheets. Intercompany investments, accounts and transactions have been eliminated. MPLX’s investments in which MPLX exercises significant influence but does not control and does not have a controlling financial interest are accounted for using the equity method. MPLX’s investments in VIEs in which MPLX exercises significant influence but does not control and is not the primary beneficiary are also accounted for using the equity method.

In preparing the Consolidated Statements of Equity, net income attributable to MPLX LP is allocated to Series A and Series B preferred unitholders based on a fixed distribution schedule. Distributions, although earned, are not accrued until declared. The allocation of net income attributable to MPLX LP for purposes of calculating net income per limited partner unit is described in Note 6.

2. Accounting Standards

Recently Adopted

We did not adopt any ASUs during the first six months of 2021 that are expected to have a material impact to our financial statements or financial statement disclosures.

3. Acquisitions and Dispositions

Sale of Javelina Assets and Liabilities

On February 12, 2021, MarkWest Energy Operating Company, L.L.C., (“MarkWest Energy”) a wholly owned subsidiary of MPLX, completed the sale of all of MarkWest Energy’s equity interests in MarkWest Javelina Company L.L.C., MarkWest Javelina Pipeline Company L.L.C., and MarkWest Gas Services L.L.C. (collectively, “Javelina”) pursuant to the terms of an Equity Purchase Agreement entered into with a third party on December 23, 2020. The agreement included adjustments for working capital as well as an earnout provision based on the performance of the assets. No gain or loss was recorded on the sale. The estimated value of the earnout provision was recorded as a contingent asset shown within “Other noncurrent assets” on the Consolidated Balance Sheets as of June 30, 2021. Javelina’s assets and liabilities sold are shown on the Consolidated Balance Sheets as “Assets held for sale” and “Liabilities held for sale” for the year ended December 31, 2020. Prior to the sale, Javelina was reported within the G&P segment.

Wholesale Exchange

On July 31, 2020, MPLX entered into a Redemption Agreement (the “Redemption Agreement”) with WRSW, a wholly owned subsidiary of MPC, pursuant to which MPLX agreed to transfer to WRSW all of the outstanding membership interests in WRW in exchange for the redemption of MPLX common units held by WRSW. The transaction effected the transfer to MPC of the Western wholesale distribution business that MPLX acquired as a result of its acquisition of ANDX. Per the terms of the Redemption Agreement, MPLX redeemed 18,582,088 common units (the “Redeemed Units”) held by WRSW on July 31, 2020. The number of Redeemed Units was calculated by dividing WRW’s aggregate valuation of $340 million by the simple average of the volume weighted average NYSE prices of an MPLX common unit for the ten trading days ending at market close on July 27, 2020. MPLX canceled the Redeemed Units immediately following the Wholesale Exchange. The carrying value of the net assets of WRW transferred to MPC was approximately $90 million as of July 31, 2020, resulting in $250 million being recorded to “Common Unit-holder MPC” within the Consolidated Statements of Equity, netted against the fair value of the redeemed units. Included within the $90 million carrying value of the WRW net assets was approximately $65 million of goodwill.

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4. Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the dates indicated:


	Ownership as of	Carrying value at
	June 30,	June 30,		December 31,
(In millions, except ownership percentages)	2021	2021		2020
L&S
MarEn Bakken Company LLC(1)	25%	$	460	$	465
Illinois Extension Pipeline Company, L.L.C.	35%	257		254
LOOP LLC	41%	264		252
Andeavor Logistics Rio Pipeline LLC(2)	67%	191		194
Minnesota Pipe Line Company, LLC	17%	185		188
Whistler Pipeline LLC(2)	38%	181		185
Explorer Pipeline Company	25%	65		72
W2W Holdings LLC(2)(3)	50%	70		72

Other(2)		109		103
Total L&S		1,782		1,785
G&P
MarkWest Utica EMG, L.L.C.(2)	57%	690		698
Sherwood Midstream LLC(2)	50%	550		557
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.(2)	67%	327		307
MarkWest Torñado GP, L.L.C.(2)	60%	213		188
Rendezvous Gas Services, L.L.C.(2)	78%	153		159
Sherwood Midstream Holdings LLC(2)	51%	141		148

Centrahoma Processing LLC	40%	131		145







Other(2)		46		49
Total G&P		2,251		2,251
Total		$	4,033	$	4,036

(1) The investment in MarEn Bakken Company LLC includes our 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL.

(2) Investments deemed to be VIEs. Some investments included within “Other” have also been deemed to be VIEs.

(3) Through our ownership interest in W2W Holdings LLC, we have a 15 percent equity interest Wink to Webster Pipeline LLC.

For those entities that have been deemed to be VIEs, neither MPLX nor any of its subsidiaries have been deemed to be the primary beneficiary due to voting rights on significant matters. While we have the ability to exercise influence through participation in the management committees which make all significant decisions, we have equal influence over each committee as a joint interest partner and all significant decisions require the consent of the other investors without regard to economic interest and as such we have determined that these entities should not be consolidated and apply the equity method of accounting with respect to our investments in each entity.

Sherwood Midstream LLC (“Sherwood Midstream”) has been deemed the primary beneficiary of Sherwood Midstream Holdings LLC (Sherwood Midstream Holdings”) due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings. Therefore, MPLX also reports its portion of Sherwood Midstream Holdings’ net assets as a component of its investment in Sherwood Midstream. As of June 30, 2021, MPLX has a 24.55 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.

MPLX’s maximum exposure to loss as a result of its involvement with equity method investments includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MPLX did not provide any financial support to equity method investments that it was not contractually obligated to provide during the six months ended June 30, 2021.

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During the first quarter of 2020, we recorded an other than temporary impairment for three joint ventures in which we have an interest as discussed in Note 1. Impairment of these investments was $1,264 million, of which $1,251 million was related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures.

Summarized financial information for MPLX’s equity method investments for the six months ended June 30, 2021 and 2020 is as follows:


	Six Months Ended June 30, 2021
(In millions)	VIEs		Non-VIEs		Total
Revenues and other income	$	336	$	607	$	943
Costs and expenses	217		284		501
Income from operations	119		323		442
Net income	105		283		388
Income from equity method investments(1)	$	73	$	63	$	136

(1) Includes the impact of any basis differential amortization or accretion in addition to an impairment of $6 million.


	Six Months Ended June 30, 2020
(In millions)	VIEs		Non-VIEs		Total
Revenues and other income	$	(43)	$	640	$	597
Costs and expenses	202		274		476
(Loss)/income from operations	(245)		366		121
Net (loss)/income	(283)		332		49
(Loss)/income from equity method investments(1)	$	(1,178)	$	83	$	(1,095)

(1) Includes the impact of any basis differential amortization or accretion in addition to the impairment of $1,264 million.

Summarized balance sheet information for MPLX’s equity method investments as of June 30, 2021 and December 31, 2020 is as follows:


	June 30, 2021
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	355	$	464	$	819
Noncurrent assets	7,401		4,909		12,310
Current liabilities	183		281		464
Noncurrent liabilities	$	2,379	$	862	$	3,241


	December 31, 2020
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	530	$	318	$	848
Noncurrent assets	6,889		4,997		11,886
Current liabilities	323		187		510
Noncurrent liabilities	$	1,904	$	830	$	2,734

As of June 30, 2021 and December 31, 2020, the underlying net assets of MPLX’s investees in the G&P segment exceeded the carrying value of its equity method investments by approximately $56 million and $57 million, respectively. As of June 30, 2021 and December 31, 2020, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $332 million and $331 million, respectively.

At June 30, 2021 and December 31, 2020, the G&P basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $31 million of excess related to goodwill. At June 30, 2021 and December 31, 2020, the L&S basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $167 million of excess related to goodwill.

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5. Related Party Agreements and Transactions

MPLX engages in transactions with both MPC and certain of its equity method investments as part of its normal business; however, transactions with MPC make up the majority of MPLX’s related party transactions. Transactions with related parties are further described below.

MPLX has various long-term, fee-based commercial agreements with MPC. Under these agreements, MPLX provides transportation, terminal, fuels distribution, marketing, storage, management, operational and other services to MPC. MPC has committed to provide MPLX with minimum quarterly throughput volumes on crude oil and refined products and other fees for storage capacity; operating and management fees; as well as reimbursements for certain direct and indirect costs. MPC has also committed to provide a fixed fee for 100 percent of available capacity for boats, barges and third-party chartered equipment under the marine transportation service agreement. MPLX also has a keep-whole commodity agreement with MPC under which MPC pays us a processing fee for NGLs related to keep-whole agreements and delivers shrink gas to the producers on our behalf. We pay MPC a marketing fee in exchange for assuming the commodity risk. Additionally, MPLX has obligations to MPC for services provided to MPLX by MPC under omnibus and employee services-type agreements as well as other various agreements.

Related Party Loan

MPLX is party to a loan agreement with MPC Investment LLC (“MPC Investment”) (the “MPC Loan Agreement”). Under the terms of the agreement, MPC Investment extends loans to MPLX on a revolving basis as requested by MPLX and as agreed to by MPC Investment. The borrowing capacity of the MPC Loan Agreement is $1.5 billion aggregate principal amount of all loans outstanding at any one time. The loan agreement is scheduled to expire, and borrowings under the loan agreement are scheduled to mature and become due and payable on July 31, 2024, provided that MPC Investment may demand payment of all or any portion of the outstanding principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), at any time prior to maturity. Borrowings under the MPC Loan Agreement bear interest at LIBOR plus 1.25 percent or such lower rate as would be applicable to such loans under the MPLX Credit Agreement as discussed in Note 15. Activity on the MPC Loan Agreement was as follows:


(In millions)	Six Months Ended June 30, 2021			Year Ended December 31, 2020
Borrowings	$	4,435		$	6,264
Average interest rate of borrowings	1.354		%	2.278		%
Repayments	$	3,942		$	6,858
Outstanding balance at end of period(1)	$	493		$	—

(1) Included in “Current liabilities - related parties” on the Consolidated Balance Sheets.

Related Party Revenue

Related party sales to MPC consist of crude oil and refined products pipeline and trucking transportation services based on tariff/contracted rates; storage, terminal and fuels distribution services based on contracted rates; and marine transportation services. Related party sales to MPC also consist of revenue related to volume deficiency credits.

MPLX also has operating agreements with MPC under which it receives a fee for operating MPC’s retained pipeline assets and a fixed annual fee for providing oversight and management services required to run the marine business. MPLX also receives management fee revenue for engineering, construction and administrative services for operating certain of its equity method investments.

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Revenue received from related parties included on the Consolidated Statements of Income was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Service revenues - related parties
MPC	$	907	$	857	$	1,778	$	1,784
Other	—		—		1		1
Total Service revenue - related parties	907		857		1,779		1,785
Rental income - related parties
MPC	168		237		410		471
Product sales - related parties(1)
MPC	31		30		73		63
Sales-type lease revenue - related parties
MPC	136		38		173		76
Other income - related parties
MPC	11		10		23		20
Other	16		15		32		31










Total Other income - related parties	$	27	$	25	$	55	$	51

(1) There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For the three and six months ended June 30, 2021, these sales totaled $177 million and $345 million, respectively. For the three and six months ended June 30, 2020, these sales totaled $52 million and $225 million, respectively.

Related Party Expenses

MPC provides executive management services and certain general and administrative services to MPLX under the terms of our omnibus agreements (“Omnibus charges”). Omnibus charges included in “Rental cost of sales - related parties” primarily relate to services that support MPLX’s rental operations and maintenance of assets available for rent. Omnibus charges included in “Purchases - related parties” primarily relate to services that support MPLX’s operations and maintenance activities, as well as compensation expenses. Omnibus charges included in “General and administrative expenses” primarily relate to services that support MPLX’s executive management, accounting and human resources activities. MPLX also obtains employee services from MPC under employee services agreements (“ESA charges”). ESA charges for personnel directly involved in or supporting operations and maintenance activities related to rental services are classified as “Rental cost of sales - related parties.” ESA charges for personnel directly involved in or supporting operations and maintenance activities related to other services are classified as “Purchases - related parties.” ESA charges for personnel involved in executive management, accounting and human resources activities are classified as “General and administrative expenses.” In addition to these agreements, MPLX purchases products from MPC, makes payments to MPC in its capacity as general contractor to MPLX, and has certain lease agreements with MPC.

Expenses incurred from MPC under the omnibus and employee services agreements as well as other purchases from MPC included on the Consolidated Statements of Income are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Rental cost of sales - related parties
MPC	$	23	$	41	$	62	$	87
Purchases - related parties
MPC	293		276		587		547
Other	4		4		8		9
Total Purchases - related parties	297		280		595		556
General and administrative expenses
MPC	$	63	$	68	$	120	$	132

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Some charges incurred under the omnibus and ESA agreements are related to engineering services and are associated with assets under construction. These charges are added to “Property, plant and equipment, net” on the Consolidated Balance Sheets. For the three and six months ended June 30, 2021, these charges totaled $15 million and $27 million, respectively. For the three and six months ended June 30, 2020, these charges totaled $15 million and $51 million, respectively.

MPC has also been advancing certain strategic priorities to lay a foundation for long-term success, including plans to optimize its assets and structurally lower costs in 2021 and beyond. In 2020, MPC approved and executed an involuntary workforce reduction plan, which together with employee reductions resulting from MPC's indefinite idling of its Martinez, California and Gallup, New Mexico refineries, affected approximately 2,050 employees. All of the employees that conduct MPLX’s business are directly employed by affiliates of MPC, and certain of those employees were affected by MPC’s workforce reductions. During the third and fourth quarters of 2020, MPLX reimbursed MPC for $37 million related to severance and employee benefits related expenses that MPC recorded in connection with its workforce reductions. There were no such costs in the first six months of 2021.

Related Party Assets and Liabilities

Assets and liabilities with related parties appearing on the Consolidated Balance Sheets are detailed in the table below. This table identifies the various components of related party assets and liabilities, including those associated with leases (see Note 20 for additional information) and deferred revenue on minimum volume commitments. If MPC fails to meet its minimum committed volumes, MPC will pay MPLX a deficiency payment based on the terms of the agreement. The deficiency amounts are recorded as “Current liabilities - related parties.” In many cases, MPC may then apply the amount of any such deficiency payments as a credit for volumes in excess of its minimum volume commitment in future periods under the terms of the applicable agreements. MPLX recognizes related party revenues for the deficiency payments when credits are used for volumes in excess of minimum quarterly volume commitments, where it is probable the customer will not use the credit in future periods or upon the expiration of the credits. The use or expiration of the credits is a decrease in “Current liabilities - related parties.” In addition, capital projects MPLX is undertaking at the request of MPC are reimbursed in cash and recognized as revenue over the remaining term of the applicable agreements or in some cases as an equity contribution from its sponsor.

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(In millions)	June 30, 2021		December 31, 2020
Current assets - related parties
Receivables - MPC	$	519	$	615








Receivables - Other	8		27
Prepaid - MPC	12		4
Other - MPC	2		1
Lease Receivables - MPC	73		30
Total	614		677
Noncurrent assets - related parties
Long-term receivables - MPC	32		32
Right of use assets - MPC	230		231
Long-term lease receivables - MPC	844		386
Unguaranteed residual asset - MPC	38		23
Total	1,144		672
Current liabilities - related parties
Payables - MPC	689		215





Payables - Other	31		43
Operating lease liabilities - MPC	1		1

Deferred revenue - Minimum volume deficiencies - MPC	51		66
Deferred revenue - Project reimbursements - MPC	39		30
Deferred revenue - Project reimbursements - Other	1		1
Total	812		356
Long-term liabilities - related parties
Long-term operating lease liabilities - MPC	229		229


Long-term deferred revenue - Project reimbursements - MPC	70		47
Long-term deferred revenue - Project reimbursements - Other	7		7
Total	$	306	$	283

Other Related Party Transactions

From time to time, MPLX may also sell to or purchase from related parties, assets and inventory at the lesser of average unit cost or net realizable value. Sales to related parties for the six months ended June 30, 2021 and 2020 were $15 million and $4 million, respectively. Purchases from related parties were immaterial for the six months ended June 30, 2021 and 2020.

6. Net Income/(Loss) Per Limited Partner Unit

Net income/(loss) per unit applicable to common units is computed by dividing net income/(loss) attributable to MPLX LP less income/(loss) allocated to participating securities by the weighted average number of common units outstanding.

During the three and six months ended June 30, 2021 and 2020, MPLX had participating securities consisting of common units, certain equity-based compensation awards, Series A preferred units and Series B preferred units and had dilutive potential common units consisting of certain equity-based compensation awards. Potential common units omitted from the diluted earnings per unit calculation for the three and six months ended June 30, 2021 and 2020 were less than 1 million.

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	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Net income/(loss) attributable to MPLX LP	$	706	$	648	$	1,445	$	(2,076)
Less: Distributions declared on Series A preferred units(1)	21		21		41		41

Distributions declared on Series B preferred units(1)	10		10		21		21
Limited partners’ distributions declared on MPLX common units (including common units of general partner)(1)	705		715		1,412		1,443

Undistributed net gain/(loss) attributable to MPLX LP	$	(30)	$	(98)	$	(29)	$	(3,581)

(1) See Note 7 for distribution information.


	Three Months Ended June 30, 2021
(In millions, except per unit data)	Limited Partners’ Common Units		Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	705	$	21	$	10	$	736
Undistributed net loss attributable to MPLX LP	(30)		—		—		(30)
Net income attributable to MPLX LP(1)	$	675	$	21	$	10	$	706
Weighted average units outstanding:
Basic	1,029
Diluted	1,029
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.66
Diluted	$	0.66

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.


	Three Months Ended June 30, 2020
(In millions, except per unit data)	Limited Partners’ Common Units		Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	715	$	21	$	10	$	746
Undistributed net loss attributable to MPLX LP	(98)		—		—		(98)
Net income attributable to MPLX LP(1)	$	617	$	21	$	10	$	648
Weighted average units outstanding:
Basic	1,059
Diluted	1,059
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.58
Diluted	$	0.58

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.

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	Six Months Ended June 30, 2021
(In millions, except per unit data)	Limited Partners’ Common Units		Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	1,412	$	41	$	21	$	1,474
Undistributed net loss attributable to MPLX LP	(29)		—		—		(29)
Net income attributable to MPLX LP(1)	$	1,383	$	41	$	21	$	1,445
Weighted average units outstanding:
Basic	1,033
Diluted	1,033
Net income attributable to MPLX LP per limited partner unit:
Basic	$	1.34
Diluted	$	1.34

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.


	Six Months Ended June 30, 2020
(In millions, except per unit data)	Limited Partners’ Common Units		Series A Preferred Units		Series B Preferred Units		Total
Basic and diluted net income attributable to MPLX LP per unit
Net income attributable to MPLX LP:
Distributions declared	$	1,443	$	41	$	21	$	1,505
Undistributed net loss attributable to MPLX LP	(3,581)		—		—		(3,581)
Net (loss)/income attributable to MPLX LP(1)	$	(2,138)	$	41	$	21	$	(2,076)
Weighted average units outstanding:
Basic	1,059
Diluted	1,059
Net income attributable to MPLX LP per limited partner unit:
Basic	$	(2.02)
Diluted	$	(2.02)

(1) Allocation of net income attributable to MPLX LP assumes all earnings for the period had been distributed based on the distribution priorities applicable to the period.

7. Equity

The changes in the number of common units outstanding during the six months ended June 30, 2021 are summarized below:


(In units)			Common
Balance at December 31, 2020			1,038,777,978
Unit-based compensation awards			183,111
Units redeemed in unit repurchase program			(11,929,998)

Balance at June 30, 2021			1,027,031,091

Unit Repurchase Program

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize various methods to effect the

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repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases will depend upon several factors, including market and business conditions, and repurchases may be initiated, suspended or discontinued at any time. The repurchase authorization has no expiration date. During the six months ended June 30, 2021, 11,929,998 public common units were repurchased at an average cost per unit of $26.02. Total cash paid for units repurchased during 2021 was $310 million with $657 million remaining available under the authorization for future repurchases as of June 30, 2021. As of June 30, 2021, we had agreements to acquire 126,293 additional common units for $4 million, which settled in July 2021.

Wholesale Exchange

In connection with the Wholesale Exchange as discussed in Note 3, 18,582,088 units were redeemed by MPC in exchange for all of the outstanding membership interests in WRW. These units were cancelled by MPLX immediately following the transaction.

Series B Preferred Units

MPLX has outstanding 600,000 units of 6.875 percent Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests of MPLX with a price to the public of $1,000 per unit (the “Series B preferred units”). The Series B preferred units are pari passu with the Series A preferred units with respect to distribution rights and rights upon liquidation. Series B preferred unitholders are entitled to receive a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on the 15th day, or the first business day thereafter, of February and August of each year up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three-month LIBOR plus 4.652 percent, in each case assuming a distribution is declared by the Board of Directors.

The changes in the Series B preferred unit balance from December 31, 2020 through June 30, 2021 are summarized below. Series B preferred units are included in the Consolidated Balance Sheets and Consolidated Statements of Equity within “Series B preferred units”.


(In millions)	Series B Preferred Units
Balance at December 31, 2020	$	611
Net income allocated	21
Distributions received by Series B preferred unitholders	(21)
Balance at June 30, 2021	$	611

Cash distributions – In accordance with the MPLX partnership agreement, on July 27, 2021, MPLX declared a quarterly cash distribution for the second quarter of 2021, totaling $705 million, or $0.6875 per common unit. This rate will also be received by Series A preferred unitholders. These distributions will be paid on August 13, 2021 to common unitholders of record on August 6, 2021. Additionally, in accordance with the distribution rights discussed above, MPLX will make a cash distribution totaling $21 million to Series B unitholders on August 16, 2021.

Quarterly distributions for 2021 and 2020 are summarized below:


(Per common unit)	2021		2020
March 31,	$	0.6875	$	0.6875
June 30,	$	0.6875	$	0.6875

The allocation of total quarterly cash distributions to limited and preferred unitholders is as follows for the three and six months ended June 30, 2021 and 2020. MPLX’s distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were earned.

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	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Common and preferred unit distributions:
Common unitholders, includes common units of general partner	$	705	$	715	$	1,412	$	1,443

Series A preferred unit distributions	21		21		41		41
Series B preferred unit distributions	10		10		21		21
Total cash distributions declared	$	736	$	746	$	1,474	$	1,505

8. Series A Preferred Units

On May 13, 2016, MPLX LP issued approximately 30.8 million 6.5 percent Series A Convertible preferred units for a cash purchase price of $32.50 per unit. The Series A preferred units rank senior to all common units and pari passu with all Series B preferred units with respect to distributions and rights upon liquidation. The holders of the Series A preferred units are entitled to receive, when and if declared by the board, a quarterly distribution equal to the greater of $0.528125 per unit or the amount of distributions they would have received on an as converted basis. On July 27, 2021, MPLX declared a quarterly cash distribution of $0.6875 per common unit for the second quarter of 2021. Holders of the Series A preferred units will receive the common unit rate in lieu of the lower $0.528125 base amount.

The holders may convert their Series A preferred units into common units at any time, in full or in part, subject to minimum conversion amounts and conditions. After the fourth anniversary of the issuance date, MPLX may convert the Series A preferred units into common units at any time, in whole or in part, subject to certain minimum conversion amounts and conditions, if the closing price of MPLX common units is greater than $48.75 for the 20-day trading period immediately preceding the conversion notice date. The conversion rate for the Series A preferred units shall be the quotient of (a) the sum of (i) $32.50, plus (ii) any unpaid cash distributions on the applicable preferred unit, divided by (b) $32.50, subject to adjustment for unit distributions, unit splits and similar transactions. The holders of the Series A preferred units are entitled to vote on an as-converted basis with the common unitholders and have certain other class voting rights with respect to any amendment to the MPLX partnership agreement that would adversely affect any rights, preferences or privileges of the preferred units. In addition, upon certain events involving a change of control, the holders of preferred units may elect, among other potential elections, to convert their Series A preferred units to common units at the then change of control conversion rate.

Approximately 29.6 million Series A preferred units remaining outstanding as of June 30, 2021. The changes in the redeemable preferred balance from December 31, 2020 through June 30, 2021 are summarized below:


(In millions)	Redeemable Series A Preferred Units
Balance at December 31, 2020	$	968
Net income allocated	41
Distributions received by Series A preferred unitholders	(41)

Balance at June 30, 2021	$	968

The Series A preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event which is outside MPLX’s control. Therefore, they are presented as temporary equity in the mezzanine section of the Consolidated Balance Sheets. The Series A preferred units have been recorded at their issuance date fair value, net of issuance costs. Income allocations increase the carrying value and declared distributions decrease the carrying value of the Series A preferred units. As the Series A preferred units are not currently redeemable and not probable of becoming redeemable, adjustment to the initial carrying amount is not necessary and would only be required if it becomes probable that the Series A preferred units would become redeemable.

9. Segment Information

MPLX’s chief operating decision maker is the chief executive officer (“CEO”) of its general partner. The CEO reviews MPLX’s discrete financial information, makes operating decisions, assesses financial performance and allocates resources on a type of service basis. MPLX has two reportable segments: L&S and G&P. Each of these segments is organized and managed based upon the nature of the products and services it offers.

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•L&S – transports, stores, distributes and markets crude oil, asphalt, refined petroleum products and water. Also includes an inland marine business, terminals, rail facilities, storage caverns and refining logistics.

•G&P – gathers, processes and transports natural gas; and gathers, transports, fractionates, stores and markets NGLs.

Our CEO evaluates the performance of our segments using Segment Adjusted EBITDA. Amounts included in net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method investments; (ix) distributions and adjustments related to equity method investments; (x) unrealized derivative gains/(losses); (xi) acquisition costs; (xii) noncontrolling interest; and (xiii) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) are not tied to the operational performance of the segment.

The tables below present information about revenues and other income, capital expenditures and investments in unconsolidated affiliates as well as total assets for our reportable segments:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
L&S
Service revenue	$	992	$	931	$	1,945	$	1,935
Rental income	176		246		425		488
Product related revenue	4		21		8		40
Sales-type lease revenue - related parties	136		38		173		76
Income from equity method investments	35		40		71		90
Other income	16		14		31		27
Total segment revenues and other income(1)	1,359		1,290		2,653		2,656
Segment Adjusted EBITDA(2)	947		839		1,843		1,711



Capital expenditures	76		108		135		292
Investments in unconsolidated affiliates	13		74		22		128
G&P
Service revenue	493		489		1,001		1,025
Rental income	91		89		183		177
Product related revenue	407		151		804		373
Income/(loss) from equity method investments	31		49		65		(1,185)
Other income	14		13		28		27
Total segment revenues and other income(1)	1,036		791		2,081		417
Segment Adjusted EBITDA(2)	427		388		883		810



Capital expenditures	36		110		66		244
Investments in unconsolidated affiliates	$	36	$	57	$	62	$	94

(1) Within the total segment revenues and other income amounts presented above, third party revenues for the L&S segment were $138 million and $267 million for the three and six months ended June 30, 2021, respectively, and $146 million and $304 million for the three and six months ended June 30, 2020, respectively. Third party revenues for the G&P segment were $988 million and $1,977 million for the three and six months ended June 30, 2021, respectively, and $748 million and $323 million for the three and six months ended June 30, 2020, respectively.

(2) See below for the reconciliation from Segment Adjusted EBITDA to “Net income.”

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(In millions)	June 30, 2021		December 31, 2020
Segment assets
Cash and cash equivalents	$	8	$	15
L&S	20,869		20,938
G&P	14,896		15,461
Total assets	$	35,773	$	36,414

The table below provides a reconciliation between “Net income/(loss)” and Segment Adjusted EBITDA.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Reconciliation to Net income/(loss):
L&S Segment Adjusted EBITDA	$	947	$	839	$	1,843	$	1,711
G&P Segment Adjusted EBITDA	427		388		883		810
Total reportable segments	1,374		1,227		2,726		2,521
Depreciation and amortization(1)	(318)		(321)		(647)		(646)
Provision for income taxes	—		—		(1)		—
Amortization of deferred financing costs	(18)		(15)		(35)		(29)
Non-cash equity-based compensation	(2)		(3)		(5)		(8)
Impairment expense	(42)		—		(42)		(2,165)
Net interest and other financial costs	(198)		(208)		(418)		(424)
Gain on extinguishment of debt	—		—		12		—
Income/(loss) from equity method investments	66		89		136		(1,095)
Distributions/adjustments related to equity method investments	(121)		(115)		(242)		(239)
Unrealized derivative (losses)/gains(2)	(36)		(6)		(39)		9


Other	—		(1)		(2)		(2)
Adjusted EBITDA attributable to noncontrolling interests	10		8		20		17

Net income/(loss)	$	715	$	655	$	1,463	$	(2,061)

(1) Depreciation and amortization attributable to L&S was $136 million and $283 million for the three and six months ended June 30, 2021, respectively, and $138 million and $276 million for the three and six months ended June 30, 2020, respectively. Depreciation and amortization attributable to G&P was $182 million and $364 million for the three and six months ended June 30, 2021, respectively, and $183 million and $370 million for the three and six months ended June 30, 2020, respectively.

(2) MPLX makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

10. Inventories

Inventories consist of the following:


(In millions)	June 30, 2021		December 31, 2020
NGLs	$	5	$	5
Line fill	18		13
Spare parts, materials and supplies	103		100
Total inventories	$	126	$	118

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11. Property, Plant and Equipment

Property, plant and equipment with associated accumulated depreciation is shown below:


(In millions)	June 30, 2021		December 31, 2020
L&S
Pipelines	$	6,045	$	6,026
Refining logistics	1,789		2,333
Terminals	1,652		1,643
Marine	965		965
Land, building and other	1,575		1,584
Construction-in-progress	217		262
Total L&S property, plant and equipment	12,243		12,813
G&P
Gathering and transportation	7,574		7,547
Processing and fractionation	5,726		5,721
Land, building and other	511		507
Construction-in-progress	276		287
Total G&P property, plant and equipment	14,087		14,062
Total property, plant and equipment	26,330		26,875
Less accumulated depreciation	5,978		5,657
Property, plant and equipment, net	$	20,352	$	21,218

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which is at least at the segment level and in some cases for similar assets in the same geographic region where cash flows can be separately identified. If the sum of the undiscounted cash flows is less than the carrying value of an asset group, fair value is calculated, and the carrying value is written down if greater than the calculated fair value.

During the first quarter of 2020, we identified an impairment trigger relating to asset groups within our Western G&P reporting unit as a result of significant impacts to forecasted cash flows for these asset groups resulting from the first quarter of 2020 events and circumstances as discussed in Note 1. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. After assessing each asset group within the Western G&P reporting unit for impairment, only the East Texas G&P asset group resulted in the fair value of the underlying assets being less than the carrying value. As a result, an impairment of $174 million was recorded to “Impairment expense” on the Consolidated Statements of Income in the first quarter of 2020. See Note 1 for discussion of second quarter 2021 impairments.

12. Goodwill and Intangibles

Goodwill

MPLX annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. There were no impairments recorded as a result of our November 30, 2020 annual goodwill impairment evaluation.

During the first quarter of 2020, we determined that an interim impairment analysis of the goodwill recorded was necessary based on consideration of a number of first quarter events and circumstances as discussed in Note 1. Our producer customers in our Eastern G&P region reduced production forecasts and drilling activity in response to the global economic downturn. Additionally, a decline in NGL prices impacted our future revenue forecast. After performing our evaluations related to the interim impairment of goodwill during the first quarter of 2020, we recorded an impairment of $1,814 million within the Eastern G&P reporting unit, which was recorded to “Impairment expense” on the Consolidated Statements of Income. The

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impairment was primarily driven by additional guidance related to the slowing of drilling activity, which reduced production growth forecasts from our producer customers.

Changes in the carrying amount of goodwill were as follows:


(In millions)	L&S		G&P		Total
Gross goodwill as of December 31, 2019	$	7,722	$	3,141	$	10,863
Accumulated impairment losses	—		(1,327)		(1,327)
Balance as of December 31, 2019	7,722		1,814		9,536
Impairment losses	—		(1,814)		(1,814)

Wholesale Exchange (Note 3)	(65)		—		(65)
Balance as of December 31, 2020	7,657		—		7,657



Balance as of June 30, 2021	7,657		—		7,657

Gross goodwill as of June 30, 2021	7,657		3,141		10,798
Accumulated impairment losses	—		(3,141)		(3,141)
Balance as of June 30, 2021	$	7,657	$	—	$	7,657

Intangible Assets

During the first quarter of 2020, we also determined that an impairment analysis of intangibles within our Western G&P reporting unit was necessary. See Note 11 for additional information regarding our assessment around the Western G&P reporting unit, and more specifically our East Texas G&P asset group. The fair value of the intangibles in our East Texas G&P asset group was determined based on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. After performing our evaluations related to the impairment of intangible assets associated with our East Texas G&P asset group during the first quarter of 2020, we recorded an impairment of $177 million to “Impairment expense” on the Consolidated Statements of Income related to our customer relationships. No additional impairments have been recorded since that time.

MPLX’s remaining intangible assets are comprised of customer contracts and relationships. Gross intangible assets with accumulated amortization as of June 30, 2021 and December 31, 2020 is shown below:


		June 30, 2021						December 31, 2020
(In millions)	Useful Lives	Gross		Accumulated Amortization(1)		Net		Gross		Accumulated Amortization(2)		Net
L&S	6 - 8 years	$	283	$	(99)	$	184	$	283	$	(81)	$	202
G&P	6 - 25 years	1,288		(576)		712		1,288		(531)		757
		$	1,571	$	(675)	$	896	$	1,571	$	(612)	$	959

(1) Amortization expense attributable to the L&S and G&P segments for the six months ended June 30, 2021 was $18 million and $45 million, respectively.

(2) Impairment charge of $177 million is included within the G&P accumulated amortization.

Estimated future amortization expense related to the intangible assets at June 30, 2021 is as follows:


(In millions)
2021	$	64
2022	127
2023	127
2024	127
2025	113
Thereafter	338
Total	$	896

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13. Fair Value Measurements

Fair Values – Recurring

Fair value measurements and disclosures relate primarily to MPLX’s derivative positions as discussed in Note 14. The following table presents the financial instruments carried at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 by fair value hierarchy level. MPLX has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty.


	June 30, 2021				December 31, 2020
(In millions)	Assets		Liabilities		Assets		Liabilities


Significant unobservable inputs (Level 3)


Embedded derivatives in commodity contracts	$	—	$	(102)	$	—	$	(63)
Total carrying value on Consolidated Balance Sheets	$	—	$	(102)	$	—	$	(63)

Level 3 instruments include all NGL transactions and embedded derivatives in commodity contracts. The embedded derivative liability relates to a natural gas purchase commitment embedded in a keep-whole processing agreement. The fair value calculation for these Level 3 instruments used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.64 to $1.59 per gallon with a weighted average of $0.81 per gallon and (2) the probability of renewal of 100 percent for the first five-year term and second five-year term of the gas purchase commitment and related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability, respectively. Beyond the embedded derivative discussed above, we had no outstanding commodity contracts as of June 30, 2021 or December 31, 2020.

Changes in Level 3 Fair Value Measurements

The following table is a reconciliation of the net beginning and ending balances recorded for net assets and liabilities classified as Level 3 in the fair value hierarchy.


	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
(In millions)	Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)		Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period	$	—	$	(66)	$	—	$	(45)
Total (losses)/gains (realized and unrealized) included in earnings(1)	—		(39)		—		(7)
Settlements	—		3		—		1

Fair value at end of period	—		(102)		—		(51)
The amount of total (losses)/gains for the period included in earnings attributable to the change in unrealized (losses)/gains relating to liabilities still held at end of period	$	—	$	(39)	$	—	$	(6)

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	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
(In millions)	Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)		Commodity Derivative Contracts (net)		Embedded Derivatives in Commodity Contracts (net)
Fair value at beginning of period	$	—	$	(63)	$	—	$	(60)
Total (losses)/gains (realized and unrealized) included in earnings(1)	—		(45)		—		7
Settlements	—		6		—		2
Fair value at end of period	—		(102)		—		(51)
The amount of total (losses)/gains for the period included in earnings attributable to the change in unrealized (losses)/gains relating to liabilities still held at end of period	$	—	$	(41)	$	—	$	7

(1) Gains and losses on commodity derivative contracts classified as Level 3 are recorded in “Product sales” on the Consolidated Statements of Income. Gains and losses on derivatives embedded in commodity contracts are recorded in “Purchased product costs” and “Cost of revenues” on the Consolidated Statements of Income.

Fair Values – Reported

MPLX’s primary financial instruments are cash and cash equivalents, receivables, receivables from related parties, lease receivables from related parties, accounts payable, payables to related parties and long-term debt. MPLX’s fair value assessment incorporates a variety of considerations, including (1) the duration of the instruments, (2) MPC’s investment-grade credit rating and (3) the historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. MPLX believes the carrying values of its current assets and liabilities approximate fair value. The recorded value of the amounts outstanding under the bank revolving credit facility, if any, approximates fair value due to the variable interest rate that approximates current market rates. Derivative instruments are recorded at fair value, based on available market information (see Note 14).

The fair value of MPLX’s long-term debt is estimated based on recent market non-binding indicative quotes. The long-term debt fair values are considered Level 3 measurements. The following table summarizes the fair value and carrying value of our debt, excluding finance leases:


	June 30, 2021				December 31, 2020
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt (including amounts due within one year)	$	21,838	$	19,335	$	22,951	$	20,244

14. Derivative Financial Instruments

As of June 30, 2021, MPLX had no outstanding commodity contracts beyond the embedded derivative discussed below.

Embedded Derivative - MPLX has a natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachian region expiring in December 2022. The customer has the unilateral option to extend the agreement for two consecutive five-year terms through December 2032. For accounting purposes, the natural gas purchase commitment and the term extending options have been aggregated into a single compound embedded derivative. The probability of the customer exercising its options is determined based on assumptions about the customer’s potential business strategy decision points that may exist at the time they would elect whether to renew the contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing, the probability of the producer customer exercising its option to extend and the estimated favorability of these contracts compared to current market conditions. The changes in fair value are recorded in earnings through “Purchased product costs” on the Consolidated Statements of Income. As of June 30, 2021 and December 31, 2020, the estimated fair value of this contract was a liability of $102 million and $63 million, respectively.

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Certain derivative positions are subject to master netting agreements, therefore, MPLX has elected to offset derivative assets and liabilities that are legally permissible to be offset. As of June 30, 2021 and December 31, 2020, there were no derivative assets or liabilities that were offset on the Consolidated Balance Sheets. The impact of MPLX’s derivative instruments on its Consolidated Balance Sheets is summarized below:


(In millions)	June 30, 2021				December 31, 2020
Derivative contracts not designated as hedging instruments and their balance sheet location	Asset		Liability		Asset		Liability
Commodity contracts(1)
Other current assets / Other current liabilities	$	—	$	(14)	$	—	$	(7)
Other noncurrent assets / Deferred credits and other liabilities	—		(88)		—		(56)
Total	$	—	$	(102)	$	—	$	(63)

(1) Includes embedded derivatives in commodity contracts as discussed above.

For further information regarding the fair value measurement of derivative instruments, see Note 13. There were no material changes to MPLX’s policy regarding the accounting for Level 2 and Level 3 instruments as previously disclosed in MPLX’s Annual Report on Form 10-K for the year ended December 31, 2020.

The impact of MPLX’s derivative contracts not designated as hedging instruments and the location of gains and losses recognized on the Consolidated Statements of Income is summarized below:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020




Purchased product costs
Realized (loss)/gain	$	(3)	$	(1)	$	(6)	$	(2)
Unrealized (loss)/gain	(36)		(6)		(39)		9
Purchased product costs derivative (loss)/gain	(39)		(7)		(45)		7





Total derivative (loss)/gain	$	(39)	$	(7)	$	(45)	$	7

15. Debt

MPLX’s outstanding borrowings consist of the following:


(In millions)	June 30, 2021		December 31, 2020
MPLX LP:

Bank revolving credit facility	$	—	$	175




Floating rate senior notes	1,000		1,000





















Fixed rate senior notes	18,532		19,240
Consolidated subsidiaries:
MarkWest	23		23
ANDX	45		87

Financing lease obligations(1)	9		11
Total	19,609		20,536
Unamortized debt issuance costs	(109)		(116)
Unamortized discount/premium	(265)		(281)
Amounts due within one year	(1)		(764)
Total long-term debt due after one year	$	19,234	$	19,375

(1) See Note 20 for lease information.

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Credit Agreement

MPLX’s amended and restated revolving credit facility (as amended, the “MPLX Credit Agreement”), has a borrowing capacity of up to $3.5 billion and a term that extends to July 2024. During the six months ended June 30, 2021, MPLX borrowed $2.8 billion under the MPLX Credit Agreement, at an average interest rate of 1.345 percent, and repaid $2.975 billion. At June 30, 2021, MPLX had no outstanding borrowings and less than $1 million in letters of credit outstanding under the MPLX Credit Agreement, resulting in total availability of $3.50 billion, or 100 percent of the borrowing capacity.

Floating Rate Senior Notes

MPLX has $1.0 billion of aggregate principal amount of floating rate senior notes due September 2022. The notes were offered at a price to the public of 100 percent of par and are callable, in whole or in part, at par plus accrued and unpaid interest at any time on or after September 10, 2020. Interest is payable quarterly in March, June, September and December. The interest rate applicable to the notes is LIBOR plus 1.1 percent per annum.

Fixed Rate Senior Notes

MPLX’s senior notes, including those issued by consolidated subsidiaries, consist of various series of senior notes expiring between 2022 and 2058 with interest rates ranging from 1.750 percent to 5.500 percent. Interest on each series of notes is payable semi-annually in arrears on various dates depending on the series of the notes.

On December 29, 2020, MPLX announced the redemption of $750 million outstanding aggregate principal amount of 5.250 percent senior notes due January 15, 2025, including approximately $42 million aggregate principal amount of senior notes issued by Andeavor Logistics LP. These amounts are included on the Consolidated Balance Sheets at December 31, 2020 as “Long-term debt due within one year”. The notes were redeemed on January 15, 2021 at a price equal to 102.625 percent of the principal amount, which resulted in a payment of $20 million related to the note premium offset by the immediate recognition of $12 million of unamortized debt premium and issuance costs, which resulted in a loss on extinguishment of debt of $8 million that is included on the Consolidated Statements of Income as “Other financial costs”.

16. Revenue

Disaggregation of Revenue

The following tables represent a disaggregation of revenue for each reportable segment for the three and six months ended June 30, 2021 and 2020:


	Three Months Ended June 30, 2021
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	91	$	487	$	578
Service revenue - related parties	901		6		907
Service revenue - product related	—		76		76
Product sales	1		303		304
Product sales - related parties	3		28		31
Total revenues from contracts with customers	$	996	$	900	1,896








Non-ASC 606 revenue(1)					499
Total revenues and other income					$	2,395

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	Three Months Ended June 30, 2020
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	77	$	486	$	563
Service revenue - related parties	854		3		857
Service revenue - product related	—		22		22
Product sales	17		103		120
Product sales - related parties	4		26		30
Total revenues from contracts with customers	$	952	$	640	1,592








Non-ASC 606 revenue(1)					489
Total revenues and other income					$	2,081


	Six Months Ended June 30, 2021
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	175	$	992	$	1,167
Service revenue - related parties	1,770		9		1,779
Service revenue - product related	—		153		153
Product sales	2		584		586
Product sales - related parties	6		67		73
Total revenues from contracts with customers	$	1,953	$	1,805	3,758








Non-ASC 606 revenue(1)					976
Total revenues and other income					$	4,734


	Six Months Ended June 30, 2020
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	161	$	1,014	$	1,175
Service revenue - related parties	1,774		11		1,785
Service revenue - product related	—		61		61
Product sales	32		257		289
Product sales - related parties	8		55		63
Total revenues from contracts with customers	$	1,975	$	1,398	3,373








Non-ASC 606 loss(1)					(300)
Total revenues and other income					$	3,073

(1) Non-ASC 606 Revenue includes rental income, sales-type lease revenue, income/(loss) from equity method investments, derivative gains and losses, mark-to-market adjustments, and other income.

Contract Balances

Contract assets typically relate to aid in construction agreements where the revenue recognized and MPLX’s rights to consideration for work completed exceeds the amount billed to the customer. Contract assets are included in “Other current assets” and “Other noncurrent assets” on the Consolidated Balance Sheets.

Contract liabilities, which we refer to as “Deferred revenue” and “Long-term deferred revenue,” typically relate to advance payments for aid in construction agreements and deferred customer credits associated with makeup rights and minimum volume commitments. Related to minimum volume commitments, breakage is estimated and recognized into service revenue in instances where it is probable the customer will not use the credit in future periods. We classify contract liabilities as current or long-term based on the timing of when we expect to recognize revenue.

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“Receivables, net” primarily relate to our commodity sales. Portions of the “Receivables, net” balance are attributed to the sale of commodity product controlled by MPLX prior to sale while a significant portion of the balance relates to the sale of commodity product on behalf of our producer customers. The sales and related “Receivable, net” are commingled and excluded from the table below. MPLX remits the net sales price back to our producer customers upon completion of the sale. Each period end, certain amounts within accounts payable relate to our payments to producer customers. Such amounts are not deemed material at period end as a result of when we settle with each producer.

The tables below reflect the changes in our contract balances for the six-month periods ended June 30, 2021 and 2020:


(In millions)	Balance at December 31, 2020(1)		Additions/ (Deletions)		Revenue Recognized(2)		Balance at June 30, 2021
Contract assets	$	40	$	(25)	$	1	$	16
Long-term contract assets	2		—		—		2
Deferred revenue	37		24		(17)		44
Deferred revenue - related parties	91		37		(50)		78
Long-term deferred revenue	119		9		—		128
Long-term deferred revenue - related parties	48		(8)		—		40
Long-term contract liability	$	6	$	—	$	—	$	6


(In millions)	Balance at December 31, 2019(1)		Additions/ (Deletions)		Revenue Recognized(2)		Balance at June 30, 2020
Contract assets	$	39	$	(20)	$	(1)	$	18

Deferred revenue	23		8		(5)		26
Deferred revenue - related parties	53		48		(29)		72
Long-term deferred revenue	90		11		—		101
Long-term deferred revenue - related parties	$	55	$	(2)	$	—	$	53

(1) Balance represents ASC 606 portion of each respective line item.

(2) No significant revenue was recognized related to past performance obligations in the current periods.

Remaining Performance Obligations

The table below includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

As of June 30, 2021, the amounts allocated to contract assets and contract liabilities on the Consolidated Balance Sheets are $289 million and are reflected in the amounts below. This will be recognized as revenue as the obligations are satisfied, which is expected to occur over the next 23 years. Further, MPLX does not disclose variable consideration due to volume variability in the table below.


(In millions)
2021	$	933
2022	1,767
2023	1,615
2024	1,491
2025 and thereafter	4,427
Total revenue on remaining performance obligations(1),(2),(3)	$	10,233

(1) All fixed consideration from contracts with customers is included in the amounts presented above. Variable consideration that is constrained or not required to be estimated as it reflects our efforts to perform is excluded.

(2) Arrangements deemed implicit leases are included in “Rental income” and are excluded from this table.

(3) Only minimum volume commitments that are deemed fixed are included in the table above. MPLX has various minimum volume commitments in processing arrangements that vary based on the actual Btu content of the gas received. These amounts are deemed variable consideration and are excluded from the table above.

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We do not disclose information on the future performance obligations for any contract with an original expected duration of

one year or less.

17. Supplemental Cash Flow Information


	Six Months Ended June 30,
(In millions)	2021		2020
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	414	$	423
Income taxes paid	1		1





Non-cash investing and financing activities:
Net transfers of property, plant and equipment (to)/from materials and supplies inventories	$	—	$	(1)

The Consolidated Statements of Cash Flows exclude changes to the Consolidated Balance Sheets that did not affect cash. The following is the change of additions to property, plant and equipment related to capital accruals:


	Six Months Ended June 30,
(In millions)	2021		2020

Decrease in capital accruals	$	(34)	$	(172)

18. Accumulated Other Comprehensive Loss

MPLX LP records an accumulated other comprehensive loss on the Consolidated Balance Sheets relating to pension and other post-retirement benefits provided by LOOP LLC (“LOOP”) and Explorer Pipeline Company (“Explorer”) to their employees. MPLX LP is not a sponsor of these benefit plans.

The following table shows the changes in “Accumulated other comprehensive loss” by component during the period December 31, 2020 through June 30, 2021.


(In millions)	Pension Benefits		Other Post-Retirement Benefits		Total
Balance at December 31, 2020(1)	$	(13)	$	(2)	$	(15)
Other comprehensive loss - remeasurements(2)	(2)		—		(2)






Balance at June 30, 2021(1)	$	(15)	$	(2)	$	(17)

The following table shows the changes in “Accumulated other comprehensive loss” by component during the period December 31, 2019 through June 30, 2020.


(In millions)	Pension Benefits		Other Post-Retirement Benefits		Total
Balance at December 31, 2019(1)	$	(14)	$	(1)	$	(15)
Other comprehensive loss - remeasurements(2)	—		(1)		(1)





Balance at June 30, 2020(1)	$	(14)	$	(2)	$	(16)

(1) These components of “Accumulated other comprehensive loss” are included in the computation of net periodic benefit cost by LOOP and Explorer and are therefore included on the Consolidated Statements of Income under the caption “Income/(loss) from equity method investments.”

(2) Components of other comprehensive income/loss - remeasurements relate to actuarial gains and losses as well as amortization of prior service costs. MPLX records an adjustment to “Comprehensive income” in accordance with its ownership interest in LOOP and Explorer.

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19. Equity-Based Compensation

Phantom Units

The following is a summary of phantom unit award activity of MPLX LP common units for the six months ended June 30, 2021:


	Number of Units	Weighted Average Fair Value
Outstanding at December 31, 2020	644,023	$	28.65
Granted	335,904	24.97

Settled	(201,400)	30.30
Forfeited	(1,330)	33.19
Outstanding at June 30, 2021	777,197	$	26.63

Performance Units

The following is a summary of the activity for performance unit awards to be settled in MPLX LP common units for the six months ended June 30, 2021:


			Number of Units
Outstanding at December 31, 2020			3,092,286
Granted			375,730
Settled			(1,347,177)
Forfeited			(1,761)
Outstanding at June 30, 2021			2,119,078

No new performance unit awards were granted during the six months ended June 30, 2021. The performance units shown above as granted represents subsequent tranches of the 2020 and 2019 performance unit awards that were subject to a performance condition based on MPLX LP’s 2021 distributable cash flow, which, due to the nature of the award terms, did not meet the criteria for a grant date fair value until the first quarter of 2021, at which time we began recognizing units and expense related to these tranches. Grant date fair value of the performance condition is based on potential payouts of up to $2.00 per unit. Compensation cost associated with the performance condition is based on the grant date fair value of the payout deemed most probable to occur and is adjusted as the expectation for payout changes.

20. Leases

During the second quarter of 2021 and during the first quarter of 2020, reimbursements for projects and changes to minimum volume commitments at certain L&S locations were agreed to between MPLX and MPC. These reimbursements and minimum volume commitments relate to the storage services agreements between MPLX and MPC at these locations and required the embedded leases within these agreements to be reassessed under ASC 842. As a result of the reassessment, certain leases were reclassified from an operating lease to a sales-type lease. Accordingly, the underlying assets previously shown on the Consolidated Balance Sheets associated with the sales-type leases were derecognized and the net investment in the lease (i.e., the sum of the present value of the future lease payments and the unguaranteed residual value of the assets) was recorded as a lease receivable during the respective periods. See Note 5 for the location of lease receivables and unguaranteed residual assets on the Consolidated Balance Sheets. The difference between the net book value of the underlying assets and the net investment in the lease has been recorded as a “Contribution from MPC” in the Consolidated Statements of Equity given that the impacted storage services agreements are related to a common control transaction. During the second quarter of 2021, MPLX derecognized approximately $421 million of property, plant and equipment, recorded a lease receivable of approximately $519 million, recorded an unguaranteed residual asset of approximately $14 million with the difference recorded as a deemed “Contribution from MPC” of $112 million. During the first quarter of 2020, MPLX derecognized approximately $171 million of property, plant and equipment, recorded a lease receivable of approximately $370 million, recorded an unguaranteed residual asset of approximately $10 million with the difference recorded as a deemed “Contribution from MPC” of $209 million.

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Lease revenues included on the Consolidated Statements of Income were as follows:


	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue(1)	$	144	$	68	$	195	$	66

Sales-type leases:
Profit/(loss) recognized at the commencement date	—		—		—		N/A
Interest income (Sales-type lease revenue- fixed minimum)	135		—		38		N/A
Interest income (Revenue from variable lease payments)	$	1	$	—	$	—	N/A


	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue(1)	$	346	$	136	$	381	$	129

Sales-type leases:
Profit/(loss) recognized at the commencement date	—		—		—		N/A
Interest income (Sales-type lease revenue- fixed minimum)	172		—		76		N/A
Interest income (Revenue from variable lease payments)	$	1	$	—	$	—	N/A

(1) These amounts are presented net of executory costs.

See Note 5 for additional information on where related party lease assets are recorded in the Consolidated Balance Sheets. Third party lease assets are less than $1 million as of June 30, 2021 and are included within the “Receivables, net” and “Other noncurrent assets” captions within the Consolidated Balance Sheets.

The following is a schedule of future payments on the sales-type leases as of June 30, 2021:


(In millions)	Related Party
2021	$	271
2022	543
2023	544
2024	537
2025	525
2026 and thereafter	1,017
Total minimum future rentals	3,437
Less: present value discount	2,520
Lease receivable	$	917

21. Commitments and Contingencies

MPLX is the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Some of these matters are discussed below. For matters for which MPLX has not recorded a liability, MPLX is unable to estimate a range of possible loss because

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the issues involved have not been fully developed through pleadings, discovery or court proceedings. However, the ultimate resolution of some of these contingencies could, individually or in the aggregate, be material.

Environmental Matters – MPLX is subject to federal, state and local laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites. Penalties may be imposed for non-compliance.

At June 30, 2021 and December 31, 2020, accrued liabilities for remediation totaled $24 million and $17 million, respectively. It is not presently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties, if any, that may be imposed. At June 30, 2021 and December 31, 2020, there were no balances with MPC for indemnification of environmental costs.

MPLX is involved in environmental enforcement matters arising in the ordinary course of business. While the outcome and impact to MPLX cannot be predicted with certainty, management believes the resolution of these environmental matters will not, individually or collectively, have a material adverse effect on its consolidated results of operations, financial position or cash flows.

MPLX is also a party to a number of other lawsuits and other proceedings arising in the ordinary course of business. While the ultimate outcome and impact to MPLX cannot be predicted with certainty, management believes the resolution of these other lawsuits and proceedings will not, individually or collectively, have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Guarantees – Over the years, MPLX has sold various assets in the normal course of its business. Certain of the related agreements contain performance and general guarantees, including guarantees regarding inaccuracies in representations, warranties, covenants and agreements, and environmental and general indemnifications that require MPLX to perform upon the occurrence of a triggering event or condition. These guarantees and indemnifications are part of the normal course of selling assets. MPLX is typically not able to calculate the maximum potential amount of future payments that could be made under such contractual provisions because of the variability inherent in the guarantees and indemnities. Most often, the nature of the guarantees and indemnities is such that there is no appropriate method for quantifying the exposure because the underlying triggering event has little or no past experience upon which a reasonable prediction of the outcome can be based.

In connection with our 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL, we have entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system, has agreed to make equity contributions to the joint venture upon certain events occurring to allow the entities that own and operate the Bakken Pipeline system to satisfy their senior note payment obligations. The senior notes were issued to repay amounts owed by the pipeline companies to fund the cost of construction of the Bakken Pipeline system.

In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared.

On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the Army Corps appealed the D.D.C.’s orders to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s order to the extent it directed that the pipeline be shutdown and emptied of oil. On May 21, 2021, the D.D.C. denied a renewed request for an injunction. On June 22, 2021, the D.D.C. issued an order dismissing without prejudice the tribes’ claims against the Dakota Access Pipeline. The judge noted that the plaintiffs may move to reopen the case in the event of a violation of the court’s prior orders. The pipeline remains operational.

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is shutdown. MPLX also expects to contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of June 30, 2021, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Other Legal Proceedings – In early July 2020, Tesoro High Plains Pipeline Company, LLC (“THPP”), a subsidiary of MPLX, received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. THPP appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, 2020, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue. On December 15, 2020, the Regional Director of the BIA issued a new trespass notice to THPP consistent with the Assistant Secretary - Indian Affairs order vacating the prior trespass order. The new order found that THPP was in trespass and assessed trespass damages of approximately $4 million (including interest), which has been paid. The order also required THPP to immediately cease and desist use of the portion of the pipeline that crosses the property at issue. THPP has complied with the Regional Director’s December 15, 2020 notice. On February 12, 2021, landowners filed suit in the U.S. District Court for the District of North Dakota (the “District of North Dakota”) against THPP, the Department of the Interior, the Assistant Secretary - Indian Affairs, the Interior Board of Indian Appeals and the BIA, requesting, among other things, that decisions by the Assistant Secretary - Indian Affairs and the Interior Board of Indian Appeals be vacated as to the award of damages to plaintiffs. In March 2021, THPP received a copy of an order purporting to vacate all orders related to THPP’s alleged trespass issued by the BIA between July 2, 2020 and January 14, 2021. The order directs the Regional Director of the BIA to reconsider the issue of THPP’s alleged trespass and issue a new order, if necessary, after all interested parties have had an opportunity to be heard. Subsequently, landowners voluntarily dismissed the suit filed in the District of North Dakota. On April 23, 2021, THPP filed a lawsuit in the District of North Dakota against the United States of America, the U.S. Department of the Interior and the BIA challenging the March order purporting to vacate all previous orders related to THPP’s alleged trespass.

We continue to work towards a settlement of this matter with holders of the property rights at issue.

Contractual Commitments and Contingencies – At June 30, 2021, MPLX’s contractual commitments to acquire property, plant and equipment totaled $83 million. These commitments were primarily related to G&P plant expansion, terminal and pipeline projects. In addition, from time to time and in the ordinary course of business, MPLX and its affiliates provide guarantees of MPLX’s subsidiaries payment and performance obligations in the G&P segment. Certain natural gas processing and gathering arrangements require MPLX to construct new natural gas processing plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified construction milestones are not achieved for reasons other than force majeure. In certain cases, certain producers may have the right to cancel the processing arrangements if there are significant delays that are not due to force majeure. As of June 30, 2021, management does not believe there are any indications that MPLX will not be able to meet the construction milestones, that force majeure does not apply or that such fees and charges will otherwise be triggered.

22. Subsequent Events

On August 4, 2021, MPLX announced the intent to provide notice of the redemption of all of the $1 billion outstanding aggregate principal amount of MPLX's LIBOR plus 1.1 percent per annum floating rate senior notes due September 9, 2022. The notes are expected to be redeemed on September 3, 2021, at a price equal to 100 percent of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date. MPLX expects to fund the redemption amount with a combination of cash on hand and borrowings under the MPLX Credit Agreement or the MPC Loan Agreement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with the unaudited consolidated financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020.

Disclosures Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements that are subject to risks, contingencies or uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other similar expressions that convey the uncertainty of future events or outcomes.

Forward-looking statements include, among other things, statements regarding:

•future financial and operating results;

•environmental, social and governance (“ESG”) goals and targets, including those related to greenhouse gas emissions, diversity and inclusion and ESG reporting;

•our plans to achieve our ESG goals and targets and to monitor and report progress thereon;

•the success or timing of completion of ongoing or anticipated capital or maintenance projects;

•the timing and amount of future distributions or unit repurchases; and

•the anticipated effects of actions of third parties such as competitors, activist investors, federal, foreign, state or local regulatory authorities, or plaintiffs in litigation.

Our forward-looking statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties and assumptions that we cannot predict. Material differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

•general economic, political or regulatory developments, including changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, or taxation;

•the magnitude, duration and potential resurgence of the COVID-19 pandemic and its restrictions, including travel restrictions, business and school closures, increased remote work, stay-at-home orders and other actions taken by individuals, governments and the private sector to stem the spread of the virus;

•the ability of MPC to achieve its strategic objectives and the effects of those strategic decisions on us;

•further impairments;

•negative capital market conditions, including an increase of the current yield on common units;

•the ability to achieve strategic and financial objectives, including with respect to distribution coverage, future distribution levels, proposed projects and completed transactions;

•the success of MPC’s portfolio optimization, including the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows;

•adverse changes in laws including with respect to tax and regulatory matters;

•the adequacy of capital resources and liquidity, including the availability of sufficient cash flow to pay distributions and access to debt on commercially reasonable terms, and the ability to successfully execute business plans, growth strategies and self-funding models;

•the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products;

•volatility in or degradation of market and industry conditions;

•changes to the expected construction costs and timing of projects and planned investments, and the ability to obtain regulatory and other approvals with respect thereto;

•completion of midstream infrastructure by competitors;

•disruptions due to equipment interruption or failure, including electrical shortages and power grid failures;

•the suspension, reduction or termination of MPC’s obligations under MPLX’s commercial agreements;

•modifications to financial policies, capital budgets, and earnings and distributions;

•the ability to manage disruptions in credit markets or changes to credit ratings;

•compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations or enforcement actions initiated thereunder;

•adverse results in litigation;

•the reliability of processing units and other equipment;

•the effect of restructuring or reorganization of business components;

•the potential effects of changes in tariff rates on our business, financial condition, results of operations and cash flows;

•foreign imports and exports of crude oil, refined products, natural gas and NGLs;

•changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;

•changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks and refined products;

•the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;

•actions taken by our competitors, including pricing adjustments and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;

•expectations regarding joint venture arrangements and other acquisitions or divestitures of assets;

•midstream and refining industry overcapacity or under capacity;

•accidents or other unscheduled shutdowns affecting our machinery, pipelines, processing, fractionation and treating facilities or equipment, or those of our suppliers or customers;

•acts of war, terrorism or civil unrest that could impair our ability to gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products; and

•political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other hydrocarbon-based products.

For additional risk factors affecting our business, see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2020. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

MPLX OVERVIEW

We are a diversified, large-cap MLP formed by MPC, that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. We are engaged in the transportation, storage and distribution of crude oil and refined petroleum products; the gathering, processing and transportation of natural gas; and the gathering, transportation, fractionation, storage and marketing of NGLs. Our operations are conducted in our Logistics and Storage and Gathering and Processing segments.

SIGNIFICANT FINANCIAL AND OTHER HIGHLIGHTS

Significant financial highlights including revenues and other income, income from operations, net income, adjusted EBITDA attributable to MPLX and DCF attributable to GP and LP unitholders for the three months ended June 30, 2021 and June 30, 2020 are shown in the chart below. See the Non-GAAP Financial Information section below for the definitions of Adjusted EBITDA and DCF and the Results of Operations section for further details regarding changes in these metrics.

Other Highlights

•Announced a second quarter 2021 distribution rate of $0.6875 per common unit.

•During the second quarter of 2021, we returned $155 million to unitholders through the repurchase of 5,657,017 public common units under our unit repurchase program. As of June 30, 2021, total repurchases of $343 million have been made under the unit repurchase program since the program was launched in the fourth quarter of 2020.

•Generated net cash provided by operating activities of $1,365 million which resulted in excess cash flow after distributions to common and preferred unitholders of $481 million.

CURRENT ECONOMIC ENVIRONMENT

During the first half of 2021, we have seen improvement in the environment in which our business operates as COVID-19 impacts are beginning to subside. The increased availability of vaccinations and easing of COVID-19 restrictions has been followed by an increase in economic activity, however, we are unable to predict the potential effects a resurgence of COVID-19 may have on our financial position and results.

In the first quarter of 2020, the outbreak of COVID-19 and its development into a pandemic resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This significantly reduced global economic activity and resulted in a decline in the demand for products for which we provide midstream services. Macroeconomic conditions and global geopolitical events have also resulted in significant price volatility related to those aforementioned products.

We took actions to respond to the impacts that these matters have had on our business including:

•Emphasizing strict capital discipline by focusing on investments that deliver the most attractive returns

•Identifying areas where we can reduce operating expenses across the business

•Evaluating and high-grading our capital portfolio

Many uncertainties remain with respect to COVID-19 and we are unable to predict the ultimate economic impacts from COVID-19 and how quickly economies can fully recover to pre-pandemic levels. We believe we have proactively addressed

many of the known impacts of COVID-19 to the extent possible and will strive to continue to do so, but there can be no guarantee the measures will be fully effective.

NON-GAAP FINANCIAL INFORMATION

Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of Adjusted EBITDA, DCF, free cash flow (“FCF”) and excess/deficit cash flow. The amount of Adjusted EBITDA and DCF generated is considered by the board of directors of our general partner in approving MPLX’s cash distributions.

We define Adjusted EBITDA as net income adjusted for: (i) depreciation and amortization; (ii) provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) (gain)/loss on extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method investments; (ix) distributions and adjustments related to equity method investments; (x) unrealized derivative gains/(losses); (xi) acquisition costs; (xii) noncontrolling interest; and (xiii) other adjustments as deemed necessary. We also use DCF, which we define as Adjusted EBITDA adjusted for: (i) deferred revenue impacts; (ii) net interest and other financial costs; (iii) net maintenance capital expenditures; (iv) equity method investment capital expenditures paid out; and (v) other adjustments as deemed necessary. We make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

We define FCF as net cash provided by operating activities adjusted for (i) net cash used in investing activities; (ii) contributions from MPC; (iii) contributions from noncontrolling interests and (iv) distributions to noncontrolling interests. We define excess/deficit cash flow as FCF adjusted for distributions to common and preferred unitholders.

We believe that the presentation of Adjusted EBITDA, DCF, FCF and excess/deficit cash flow provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and DCF are net income and net cash provided by operating activities while the GAAP measure most directly comparable to FCF and excess/deficit cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities as they have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP financial measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because non-GAAP financial measures may be defined differently by other companies in our industry, our definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. For a reconciliation of Adjusted EBITDA and DCF to their most directly comparable measures calculated and presented in accordance with GAAP, see the Results of Operations section. For a reconciliation of FCF and excess/deficit cash flow to their most directly comparable measure calculated and presented in accordance with GAAP, see the Liquidity and Capital resources section.

Management also utilizes Segment Adjusted EBITDA in evaluating the financial performance of our segments. The use of this measure allows investors to understand how management evaluates financial performance to make operating decisions and allocate resources.

COMPARABILITY OF OUR FINANCIAL RESULTS

Our acquisitions and dispositions have impacted comparability of our financial results (see Note 3 of the Notes to Consolidated Financial Statements).

RESULTS OF OPERATIONS

The following tables and discussion are a summary of our results of operations for the three and six months ended June 30, 2021 and 2020, including a reconciliation of Adjusted EBITDA and DCF from “Net income/(loss)” and “Net cash provided by operating activities,” to the most directly comparable GAAP financial measures.


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2021		2020		Variance		2021		2020		Variance
Revenues and other income:












Total revenues and other income(1)	$	2,395	$	2,081	$	314	$	4,734	$	3,073	$	1,661
Costs and expenses:
Cost of revenues (excludes items below)	293		315		(22)		566		683		(117)
Purchased product costs	338		87		251		614		222		392
Rental cost of sales	32		33		(1)		64		68		(4)
Rental cost of sales - related parties	23		41		(18)		62		87		(25)
Purchases - related parties	297		280		17		595		556		39
Depreciation and amortization	318		321		(3)		647		646		1
Impairment expense	42		—		42		42		2,165		(2,123)
General and administrative expenses	87		96		(9)		173		193		(20)


Other taxes	34		30		4		66		61		5
Total costs and expenses	1,464		1,203		261		2,829		4,681		(1,852)
Income/(loss) from operations	931		878		53		1,905		(1,608)		3,513
Related party interest and other financial costs	2		1		1		2		4		(2)
Interest expense, net of amounts capitalized	195		206		(11)		393		417		(24)
Other financial costs	19		16		3		46		32		14
Income/(loss) before income taxes	715		655		60		1,464		(2,061)		3,525
Provision for income taxes	—		—		—		1		—		1
Net income/(loss)	715		655		60		1,463		(2,061)		3,524
Less: Net income attributable to noncontrolling interests	9		7		2		18		15		3

Net income/(loss) attributable to MPLX LP	706		648		58		1,445		(2,076)		3,521

Adjusted EBITDA attributable to MPLX LP(2)	1,374		1,227		147		2,726		2,521		205

DCF attributable to GP and LP unitholders(2)	$	1,219	$	996	$	223	$	2,325	$	2,043	$	282

(1) The three and six months ended June 30, 2021 includes $6 million of impairment expense related to equity method investments. The six months ended June 30, 2020 includes impairment expense of approximately $1.3 billion related to equity method investments.

(2) Non-GAAP measure. See reconciliation below to the most directly comparable GAAP measures.


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2021		2020		Variance		2021		2020		Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income:
Net income/(loss)	$	715	$	655	$	60	$	1,463	$	(2,061)	$	3,524
Provision for income taxes	—		—		—		1		—		1
Amortization of deferred financing costs	18		15		3		35		29		6
Gain on extinguishment of debt	—		—		—		(12)		—		(12)
Net interest and other financial costs	198		208		(10)		418		424		(6)
Income/(loss) from operations	931		878		53		1,905		(1,608)		3,513
Depreciation and amortization	318		321		(3)		647		646		1
Non-cash equity-based compensation	2		3		(1)		5		8		(3)
Impairment expense	42		—		42		42		2,165		(2,123)
(Income)/loss from equity method investments	(66)		(89)		23		(136)		1,095		(1,231)
Distributions/adjustments related to equity method investments	121		115		6		242		239		3
Unrealized derivative losses/(gains)(1)	36		6		30		39		(9)		48


Other	—		1		(1)		2		2		—
Adjusted EBITDA	1,384		1,235		149		2,746		2,538		208
Adjusted EBITDA attributable to noncontrolling interests	(10)		(8)		(2)		(20)		(17)		(3)

Adjusted EBITDA attributable to MPLX LP(2)	1,374		1,227		147		2,726		2,521		205
Deferred revenue impacts	40		40		—		62		63		(1)
Net interest and other financial costs	(198)		(208)		10		(418)		(424)		6
Maintenance capital expenditures	(28)		(33)		5		(46)		(67)		21
Maintenance capital expenditures reimbursements	10		6		4		17		20		(3)
Equity method investment capital expenditures paid out	(2)		(4)		2		(3)		(11)		8

Other(3)	54		(1)		55		49		3		46

DCF	1,250		1,027		223		2,387		2,105		282
Preferred unit distributions	(31)		(31)		—		(62)		(62)		—
DCF attributable to GP and LP unitholders	$	1,219	$	996	$	223	$	2,325	$	2,043	$	282

(1) MPLX makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, changes in the fair value of the derivative are recorded as an unrealized gain or loss. When a derivative contract matures or is settled, the previously recorded unrealized gain or loss is reversed and the realized gain or loss of the contract is recorded.

(2) For the three months ended June 30, 2021, the L&S and G&P segments made up $947 million and $427 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the three months ended June 30, 2020, the L&S and G&P segments made up $839 million and $388 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2021, the L&S and G&P segments made up $1,843 million and $883 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2020, the L&S and G&P segments made up $1,711 million and $810 million of Adjusted EBITDA attributable to MPLX LP, respectively.

(3) 2021 includes one time impact from Refining Logistics harmonization project of $54 million.


	Six Months Ended June 30,
(In millions)	2021		2020		Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net cash provided by operating activities:
Net cash provided by operating activities	$	2,489	$	2,114	$	375
Changes in working capital items	(170)		12		(182)
All other, net	(29)		(26)		(3)
Non-cash equity-based compensation	5		8		(3)
Net (loss)/gain on disposal of assets	(1)		(1)		—
Gain on extinguishment of debt	(12)		—		(12)
Net interest and other financial costs	418		424		(6)
Current income taxes	2		1		1

Unrealized derivative losses/(gains)(1)	39		(9)		48


Other adjustments to equity method investment distributions	3		13		(10)
Other	2		2		—
Adjusted EBITDA	2,746		2,538		208
Adjusted EBITDA attributable to noncontrolling interests	(20)		(17)		(3)

Adjusted EBITDA attributable to MPLX LP(2)	2,726		2,521		205
Deferred revenue impacts	62		63		(1)
Net interest and other financial costs	(418)		(424)		6
Maintenance capital expenditures	(46)		(67)		21
Maintenance capital expenditures reimbursements	17		20		(3)
Equity method investment capital expenditures paid out	(3)		(11)		8

Other(3)	49		3		46

DCF	2,387		2,105		282
Preferred unit distributions	(62)		(62)		—
DCF attributable to GP and LP unitholders	$	2,325	$	2,043	$	282

(2) For the six months ended June 30, 2021, the L&S and G&P segments made up $1,843 million and $883 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the six months ended June 30, 2020, the L&S and G&P segments made up $1,711 million and $810 million of Adjusted EBITDA attributable to MPLX LP, respectively.

(3) 2021 includes one time impact from Refining Logistics harmonization project of $54 million.

Three months ended June 30, 2021 compared to three months ended June 30, 2020

Total revenues and other income increased $314 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to higher prices in all of the G&P regions of approximately $225 million and an increase in volume in the Southwest and Marcellus of $44 million. There were also increased pipeline volumes of $107 million, increased revenue from terminal throughput of $40 million and increased terminal storage fees and additional refining logistics fees associated with increased storage capacity and annual fee escalations. These increases were partially offset by decreases in marine transportation fees of $27 million, pipeline tariff rates of $27 million, a decrease of $43 million from the Wholesale Exchange, and the Javelina divestiture in the Southwest.

Cost of revenues decreased $22 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange, as well as to lower repairs, maintenance and operating costs in the Marcellus and Southwest and lower project-related spend, both as a result of cost reduction initiatives. These decreases were partially offset by higher prices in the Rockies and costs incurred to decommission assets in the Southwest.

Purchased product costs increased $251 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to an increase of $30 million related to an increase in unrealized derivative losses in the current year, higher prices of $166 million in the Southwest and Southern Appalachia and higher volumes of $55 million in the Southwest.

Rental cost of sales - related parties decreased $18 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to modifications to lease contracts which resulted in costs now being recorded to purchases - related parties, as noted below, as opposed to rental cost of sales - related parties.

Purchases - related parties increased $17 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to modifications to lease contracts which resulted in costs now being recorded to purchases - related parties as opposed to rental cost of sales - related parties, as noted above.

Impairment expense increased $42 million in the second quarter of 2021 compared to the same period of 2020. This was primarily related to our continued emphasis on portfolio optimization with the anticipated divestiture of several non-core assets and the closure of other non-core assets.

General and administrative expenses decreased $9 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to decreased employee costs from MPC as a result of cost reduction initiatives.

Six months ended June 30, 2021 compared to six months ended June 30, 2020

Total revenues and other income increased $1,661 million in the first six months of 2021 compared to the same period of 2020. This increase was primarily due to impairments recorded in the first quarter of 2020 of $1,264 million. Impairments were recognized related to our ownership in MarkWest Utica EMG, our indirect ownership in Ohio Gathering Company, L.L.C. through our investment in MarkWest Utica EMG and our ownership in Uintah Basin Field Services, L.L.C. The remaining $397 million increase is primarily due to higher product related revenue due to higher prices in all G&P regions of approximately $416 million, increased volumes in the Southwest and Marcellus of $37 million, increased pipeline volumes of $101 million and increased revenue from terminal throughput of $44 million. There were also increases related to increased terminal storage fees, refining logistics fee escalations and higher fees from contracts in the Marcellus and Southern Appalachia. These increases were partially offset by decreases related to the Wholesale Exchange of $84 million, lower pipeline tariff rates of $12 million, lower marine transportation fees of $53 million and lower volume deficiency payments of $9 million. In addition, lower fees from lower volumes associated with impacts related to severe weather in the Southwest, the Javelina divestiture as well as lower fees from lower volumes in the Bakken, also resulted in a decrease of $47 million.

Cost of revenues decreased $117 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange as well as lower repairs, maintenance and operating costs, and lower project-related spend, both as a result of cost reduction initiatives. These decreases were partially offset by higher prices in the Rockies and costs incurred to decommission assets in the Southwest.

Purchased product costs increased $392 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to an increase of $48 million related to unrealized derivative gains in the prior year compared to unrealized derivative losses in the current year, higher prices of $304 million in the Southwest and Southern Appalachia and higher volumes of $40 million in the Southwest.

Rental cost of sales - related parties decreased $25 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to lower operating costs as well as decreased project spend from overall cost reduction initiatives. In addition, modifications to lease contracts resulted in costs now being recorded to purchases - related parties, as noted below, as opposed to rental cost of sales - related parties.

Purchases - related parties increased $39 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to modifications to lease contracts which resulted in costs now being recorded to purchases - related parties as opposed to rental cost of sales - related parties, as noted above. In addition, higher prices in the Rockies and higher employee related costs also contributed to the increase.

Impairment expense decreased $2,123 million in the first six months of 2021 compared to the same period of 2020. During the first quarter of 2020 we recorded impairment expense for goodwill, intangible assets and property, plant and equipment of $1,814 million, $177 million and $174 million, respectively. The impairment of goodwill related to our Eastern G&P reporting unit while the intangible asset and property, plant and equipment impairments relate to certain assets in our Southwest region. The impairments were primarily driven by the slowing of drilling activity, which reduced production growth forecasts from our producer customers. This decrease was partially offset by an impairment recorded during the second quarter of 2021 related to our continued emphasis on portfolio optimization with the anticipated divestiture of several non-core assets and the closure of other non-core assets.

General and administrative expenses decreased $20 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to decreased employee costs from MPC as a result of cost reduction initiatives as well as decreased other miscellaneous expenses.

SEGMENT RESULTS

We classify our business in the following reportable segments: L&S and G&P. Segment Adjusted EBITDA represents Adjusted EBITDA attributable to the reportable segments. Amounts included in net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) (gain)/loss on extinguishment of debt; (v) non-cash equity-based compensation; (vi) impairment expense; (vii) net interest and other financial costs; (viii) income/(loss) from equity method investments; (ix) distributions and adjustments related to equity method investments; (x) unrealized derivative gains/(losses); (xi) acquisition costs; (xii) noncontrolling interests; and (xiii) other adjustments as deemed necessary. These items are either: (i) believed to be non-recurring in nature; (ii) not believed to be allocable or controlled by the segment; or (iii) not tied to the operational performance of the segment.

The tables below present information about Segment Adjusted EBITDA for the reported segments for the three and six months ended June 30, 2021 and 2020.

L&S Segment

Second Quarter L&S Segment Financial Highlights (in millions)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2021		2020		Variance		2021		2020		Variance
Service revenue	$	992	$	931	$	61	$	1,945	$	1,935	$	10
Rental income	176		246		(70)		425		488		(63)
Product related revenue	4		21		(17)		8		40		(32)
Sales-type lease revenue	136		38		98		173		76		97
Income from equity method investments	35		40		(5)		71		90		(19)
Other income	16		14		2		31		27		4
Total segment revenues and other income	1,359		1,290		69		2,653		2,656		(3)
Cost of revenues	143		190		(47)		287		428		(141)
Purchases - related parties	228		211		17		443		410		33
Depreciation and amortization	136		138		(2)		283		276		7
General and administrative expenses	46		52		(6)		92		104		(12)

Other taxes	19		18		1		38		34		4
Segment income from operations	787		681		106		1,510		1,404		106
Depreciation and amortization	136		138		(2)		283		276		7
Income from equity method investments	(35)		(40)		5		(71)		(90)		19
Distributions/adjustments related to equity method investments	58		57		1		116		114		2


Non-cash equity-based compensation	1		2		(1)		3		5		(2)
Other	—		1		(1)		2		2		—

Segment adjusted EBITDA(1)	947		839		108		1,843		1,711		132

Capital expenditures	76		108		(32)		135		292		(157)
Investments in unconsolidated affiliates	$	13	$	74	$	(61)	$	22	$	128	$	(106)

(1) See the Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income table for the reconciliation to the most directly comparable GAAP measure.

Three months ended June 30, 2021 compared to three months ended June 30, 2020

Service revenue increased $61 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to increased pipeline volumes of $107 million, increased revenue from terminal throughput of $40 million and other miscellaneous increases. These increases were partially offset by a $27 million decrease in marine transportation fees, a $23 million decrease due to the Wholesale Exchange, a decrease of $27 million due to lower pipeline tariffs, as well as a decrease of $12 million from the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts.

Rental income decreased $70 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts. The net decreases due to reclassifications were offset by increased terminal storage fees as well as additional refining logistics fees associated with increased storage capacity and annual fee escalations.

Product related revenue decreased $17 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange.

Sales-type lease revenue - related parties increased $98 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts.

Cost of revenues decreased $47 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange and lower project-related spend as a result of cost reduction initiatives. In addition, modifications to lease contracts resulted in costs now being recorded to purchases - related parties, as noted below, as opposed to rental cost of sales - related parties, which is included in the decrease being explained here.

General and administrative expenses decreased $6 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to decreased employee costs from MPC as a result of cost reduction initiatives.

Six months ended June 30, 2021 compared to six months ended June 30, 2020

Service revenue increased $10 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to increased pipeline volumes of $101 million, increased revenue from terminal throughput of $44 million. These increases were partially offset by a $53 million decrease in marine transportation fees, a $9 million decrease in volume deficiency payments, a $48 million decrease due to the Wholesale Exchange, a decrease of $12 million from lower pipeline tariffs, and a decrease of $12 million due to the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts.

Rental income decreased $63 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts. The net decreases due to reclassifications were offset by increased terminal storage fees as well as additional refining logistics fees associated with increased storage capacity and annual fee escalations.

Product related revenue decreased $32 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange.

Sales-type lease revenue - related parties increased $97 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to the reclassification of lease income between service revenue, rental income and sales-type lease revenue due to modifications to lease contracts.

Income from equity method investments decreased $19 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to decreased throughput volumes on MarEn Bakken Company LLC and Illinois Extension Pipeline Company L.L.C. and due to financing related expenses from Whistler Pipeline LLC. These decreases were partially offset by increased volume from LOOP LLC and Explorer Pipeline Company.

Cost of revenues decreased $141 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to the Wholesale Exchange and lower project-related spend as a result of cost reduction initiatives. In addition, modifications to lease contracts resulted in costs now being recorded to purchases - related parties, as noted below, as opposed to rental cost of sales - related parties, which is included in the decrease being explained here.

Purchases - related parties increased $33 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to modifications to lease contracts which resulted in costs now being recorded to purchases - related parties as opposed to rental cost of sales - related parties, which is included in cost of revenues as noted above. In addition, higher employee related costs also contributed to the increase.

Depreciation and amortization increased $7 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to accelerated depreciation related to assets at an indefinitely idled MPC refinery, as well as property, plant and equipment placed in service in the second half of 2020 and the first half of 2021.

General and administrative expenses decreased $12 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to decreased employee costs from MPC as a result of cost reduction initiatives.

G&P Segment

Second Quarter G&P Segment Financial Highlights (in millions)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2021		2020		Variance		2021		2020		Variance
Service revenue	$	493	$	489	$	4	$	1,001	$	1,025	$	(24)
Rental income	91		89		2		183		177		6
Product related revenue	407		151		256		804		373		431
Income/(loss) from equity method investments(1)	31		49		(18)		65		(1,185)		1,250
Other income	14		13		1		28		27		1
Total segment revenues and other income	1,036		791		245		2,081		417		1,664
Cost of revenues	205		199		6		405		410		(5)
Purchased product costs	338		87		251		614		222		392
Purchases - related parties	69		69		—		152		146		6
Depreciation and amortization	182		183		(1)		364		370		(6)
Impairment expense	42		—		42		42		2,165		(2,123)
General and administrative expenses	41		44		(3)		81		89		(8)

Other taxes	15		12		3		28		27		1
Segment income/(loss) from operations	144		197		(53)		395		(3,012)		3,407
Depreciation and amortization	182		183		(1)		364		370		(6)
Impairment expense	42		—		42		42		2,165		(2,123)
(Income)/loss from equity method investments	(31)		(49)		18		(65)		1,185		(1,250)
Distributions/adjustments related to equity method investments	63		58		5		126		125		1

Unrealized derivative losses/(gains)(2)	36		6		30		39		(9)		48
Non-cash equity-based compensation	1		1		—		2		3		(1)

Adjusted EBITDA attributable to noncontrolling interests	(10)		(8)		(2)		(20)		(17)		(3)
Segment Adjusted EBITDA(3)	427		388		39		883		810		73

Capital expenditures	36		110		(74)		66		244		(178)
Investments in unconsolidated affiliates	$	36	$	57	$	(21)	$	62	$	94	$	(32)

(1) Includes impairment expense of $6 million for the three and six months ended June 30, 2021 and $1,264 million for the six months ended June 30, 2020.

(3) See the Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income table for the reconciliation to the most directly comparable GAAP measure.

Three months ended June 30, 2021 compared to three months ended June 30, 2020

Product related revenue increased $256 million in the second quarter of 2021 compared to the same period of 2020. This was primarily due to higher prices in all of the regions of approximately $225 million and an increase in volume in the Southwest and Marcellus of $44 million. This was partially offset by lower volumes in the Southwest and Rockies of $12 million, mainly due to the Javelina divestiture in the Southwest.

Income from equity method investments decreased $18 million in the second quarter of 2021 compared to the same period of 2020. This decrease was driven by lower volumes at our joint ventures in the Utica region, lower volumes and higher prices at Centrahoma Processing LLC and an asset impairments recognized within our Three Rivers Gathering LLC joint venture. These decreases were partially offset by higher volumes at our MarkWest Torñado GP, L.L.C. joint venture.

Cost of revenues increased $6 million in the second quarter of 2021 compared to the same period of 2020. This increase is attributable to higher prices of $7 million in the Rockies and costs incurred to decommission assets in the Southwest, partially offset by lower repairs, maintenance and operating costs in the Marcellus and Southwest as a result of cost reduction initiatives.

Six months ended June 30, 2021 compared to six months ended June 30, 2020

Service revenue decreased $24 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to lower fees from lower volumes in the Southwest and Bakken of $26 million, which includes impacts related to severe weather in the Southwest, partially offset by an increase in prices in the Bakken.

Rental income increased $6 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to higher fees related to contracts in the Marcellus and Southern Appalachia.

Product related revenue increased $431 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to higher prices in all of the regions of approximately $416 million and an increase in volume in the Southwest and Marcellus of $37 million, partially offset by lower volumes in the Rockies, impacts related to severe weather in the Southwest and the impact related to the Javelina divestiture, all which resulted in a decrease of $21 million.

Income from equity method investments increased $1,250 million in the first six months of 2021 compared to the same period of 2020. This increase was driven by impairments recorded in the first quarter of 2020 of $1,264 million. Impairments were recognized related to our ownership in MarkWest Utica EMG, our indirect ownership in Ohio Gathering Company, L.L.C. through our investment in MarkWest Utica EMG and our ownership in Uintah Basin Field Services, L.L.C. Also contributing to the increase was higher volumes associated with our Sherwood Midstream LLC, Ohio Condensate Company and MarkWest Torñado GP, L.L.C. joint ventures. These increases were partially offset by lower volumes at our joint ventures in the Utica region, lower volumes and higher prices at Centrahoma Processing LLC and an asset impairment recognized within our Three Rivers Gathering LLC joint venture.

Purchases - related parties increased $6 million in the first six months of 2021 compared to the same period of 2020. This was primarily due to higher prices of $13 million in the Rockies partially offset by lower employee related costs.

Depreciation and amortization decreased $6 million in the first six months of 2021 compared to the same period of 2020 primarily due to the impairment of intangible assets and property, plant and equipment during the first quarter of 2020 which has resulted in less depreciation expense in the current period when compared to prior periods, partially offset by property, plant and equipment placed in service in the second half of 2020 and the first half of 2021.

General and administrative expenses decreased $8 million in the first six months of 2021 compared to the same period of 2020 due to lower employee related costs.

SEASONALITY

The volume of crude oil and refined products transported and stored utilizing our assets is directly affected by the level of supply and demand for crude oil and refined products in the markets served directly or indirectly by our assets. Any effects of seasonality on the L&S segment’s revenues will be mitigated through the use of our fee-based transportation and storage services agreements with MPC that include minimum volume commitments.

In our G&P segment, we experience minimal impacts from seasonal fluctuations which impact the demand for natural gas and NGLs and the related commodity prices caused by various factors including variations in weather patterns from year to year. We are able to manage the seasonality impacts through the execution of our marketing strategy and via our storage capabilities. Overall, our exposure to seasonality fluctuations is declining due to growth in our fee-based business.

OPERATING DATA


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
L&S
Pipeline throughput (mbpd)
Crude oil pipelines	3,475		2,733		3,379		2,971
Product pipelines	2,103		1,586		1,981		1,746
Total pipelines	5,578		4,319		5,360		4,717

Average tariff rates ($ per barrel)(1)
Crude oil pipelines	$	0.95	$	0.99	$	0.95	$	0.96
Product pipelines	0.77		0.84		0.78		0.81
Total pipelines	$	0.88	$	0.94	$	0.89	$	0.90

Terminal throughput (mbpd)	2,986		2,420		2,801		2,693



Marine Assets (number in operation)(2)
Barges	299		305		299		305
Towboats	23		23		23		23


	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
	MPLX LP(3)	MPLX LP Operated(4)	MPLX LP(3)	MPLX LP Operated(4)
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,300	1,300	1,385	1,385
Utica Operations	—	1,531	—	1,903
Southwest Operations	1,356	1,496	1,365	1,393
Bakken Operations	155	155	126	126
Rockies Operations	442	595	495	683
Total gathering throughput	3,253	5,077	3,371	5,490

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,155	5,605	4,112	5,516
Utica Operations	—	499	—	585
Southwest Operations	1,326	1,461	1,412	1,510
Southern Appalachian Operations	224	224	223	223
Bakken Operations	154	154	126	126
Rockies Operations	429	429	516	516
Total natural gas processed	6,288	8,372	6,389	8,476

C2 + NGLs Fractionated (mbpd)
Marcellus Operations(5)	477	477	464	464
Utica Operations(5)	—	27	—	31
Southwest Operations	—	—	13	13
Southern Appalachian Operations(6)	12	12	12	12
Bakken Operations	25	25	19	19
Rockies Operations	4	4	4	4
Total C2 + NGLs fractionated(7)	518	545	512	543


	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
	MPLX LP(3)	MPLX LP Operated(4)	MPLX LP(3)	MPLX LP Operated(4)
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,299	1,299	1,402	1,402
Utica Operations	—	1,549	—	1,852
Southwest Operations	1,364	1,472	1,461	1,497
Bakken Operations	150	150	141	141
Rockies Operations	457	611	544	729
Total gathering throughput	3,270	5,081	3,548	5,621

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,201	5,641	4,155	5,519
Utica Operations	—	506	—	616
Southwest Operations	1,311	1,414	1,530	1,595
Southern Appalachian Operations	226	226	233	233
Bakken Operations	149	149	141	141
Rockies Operations	435	435	528	528
Total natural gas processed	6,322	8,371	6,587	8,632

C2 + NGLs Fractionated (mbpd)
Marcellus Operations(5)	483	483	460	460
Utica Operations(5)	—	28	—	33
Southwest Operations	4	4	14	14
Southern Appalachian Operations(6)	11	11	12	12
Bakken Operations	22	22	25	25
Rockies Operations	4	4	4	4
Total C2 + NGLs fractionated(7)	524	552	515	548


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Pricing Information
Natural Gas NYMEX HH ($ per MMBtu)	$	2.97	$	1.76	$	2.85	$	1.81
C2 + NGL Pricing ($ per gallon)(8)	$	0.75	$	0.34	$	0.74	$	0.37

(1) Average tariff rates calculated using pipeline transportation revenues divided by pipeline throughput barrels.

(2) Represents total at end of period.

(3) This column represents operating data for entities that have been consolidated into the MPLX financial statements.

(4) This column represents operating data for entities that have been consolidated into the MPLX financial statements as well as operating data for MPLX-operated equity method investments.

(5) Hopedale is jointly owned by Ohio Fractionation and MarkWest Utica EMG. Ohio Fractionation is a subsidiary of MarkWest Liberty Midstream. MarkWest Liberty Midstream and MarkWest Utica EMG are entities that operate in the Marcellus and Utica regions, respectively. Marcellus Operations includes Ohio Fractionation’s portion utilized of the jointly owned Hopedale Fractionation Complex. Utica Operations includes MarkWest Utica EMG’s portion utilized of the jointly owned Hopedale Fractionation Complex. Additionally, Sherwood Midstream has the right to fractionation revenue and the obligation to pay expenses related to 40 mbpd of capacity in the Hopedale 3 and Hopedale 4 fractionators.

(6) Includes NGLs fractionated for the Marcellus Operations and Utica Operations.

(7) Purity ethane makes up approximately 190 mbpd and 193 mbpd of total MPLX Operated, fractionated products for the three months ended June 30, 2021 and 2020, respectively, and approximately 195 mbpd and 191 mbpd of total fractionated products for the six months ended June 30, 2021 and 2020, respectively. Purity ethane makes up approximately 185 mbpd and 186 mbpd of total MPLX LP consolidated, fractionated products for the three months ended June 30, 2021 and 2020, respectively, and approximately 190 mbpd and 184 mbpd of total fractionated products for the six months ended June 30, 2021 and 2020, respectively.

(8) C2 + NGL pricing based on Mont Belvieu prices assuming an NGL barrel of approximately 35 percent ethane, 35 percent propane, six percent Iso-Butane, 12 percent normal butane and 12 percent natural gasoline.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our cash and cash equivalents were $8 million at June 30, 2021 and $15 million at December 31, 2020. The change in cash, cash equivalents and restricted cash was due to the factors discussed below. Net cash provided by (used in) operating activities, investing activities and financing activities were as follows:


	Six Months Ended June 30,
(In millions)	2021		2020
Net cash provided by (used in):
Operating activities	$	2,489	$	2,114
Investing activities	(245)		(777)
Financing activities	(2,251)		(1,285)
Total	$	(7)	$	52

Net cash provided by operating activities increased $375 million in the first six months of 2021 compared to the first six months of 2020, primarily due to an increase in net income adjusted for non-cash items.

Net cash used in investing activities decreased $532 million in the first six months of 2021 compared to the first six months of 2020, primarily due to decreased spending related to the capital budget and decreased contributions to equity method investments.

Financing activities were a $2,251 million use of cash in the first six months of 2021 compared to a $1,285 million use of cash in the first six months of 2020. The primary reason for the increase in the use of cash was due to the return of capital to unitholders through the unit repurchase program as well as net repayments on long-term debt in the current year compared to net borrowings on long-term debt in the prior year.

Free Cash Flow

The following table provides a reconciliation of FCF and excess/deficit cash flow from net cash provided by operating activities for the three and six months ended June 30, 2021 and June 30, 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020			2021		2020
Net cash provided by operating activities	$	1,365	$	1,105		$	2,489	$	2,114
Adjustments to reconcile net cash provided by operating activities to free cash flow
Net cash used in investing activities	(155)		(415)			(245)		(777)
Contributions from MPC	10		6			17		20

Distributions to noncontrolling interests	(10)		(8)			(20)		(17)
Free cash flow	1,210		688			2,241		1,340




Distributions to common and preferred unitholders	(729)		(749)			(1,483)		(1,507)
Excess (deficit) cash flow	$	481	$	(61)		$	758	$	(167)

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Debt and Liquidity Overview

On January 15, 2021, MPLX redeemed $750 million outstanding aggregate principal amount of 5.250 percent senior notes due January 15, 2025, at 102.625 percent of the principal amount.

Our outstanding borrowings at June 30, 2021 and December 31, 2020 consist of the following:


(In millions)	June 30, 2021		December 31, 2020
MPLX LP:



Bank revolving credit facility	$	—	$	175




Floating rate senior notes	1,000		1,000






















Fixed rate senior notes	18,532		19,240
Consolidated subsidiaries:
MarkWest	23		23
ANDX	45		87

Financing lease obligations	9		11
Total	19,609		20,536
Unamortized debt issuance costs	(109)		(116)
Unamortized discount/premium	(265)		(281)
Amounts due within one year	(1)		(764)
Total long-term debt due after one year	$	19,234	$	19,375

Our intention is to maintain an investment-grade credit profile. As of June 30, 2021, the credit ratings on our senior unsecured debt were at or above investment grade level as follows:


Rating Agency						Rating
Moody’s						Baa2 (stable outlook)
Standard & Poor’s						BBB (negative outlook)
Fitch						BBB (stable outlook)

The ratings reflect the respective views of the rating agencies. Although it is our intention to maintain a credit profile that supports an investment grade rating, there is no assurance that these ratings will continue for any given period of time. The ratings may be revised or withdrawn entirely by the rating agencies if, in their respective judgments, circumstances so warrant.

The MPLX Credit Agreement contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type. The financial covenant requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX Credit Agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 during the six-month period following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants restrict us and/or certain of our subsidiaries from incurring debt, creating liens on assets and entering into transactions with affiliates. As of June 30, 2021, we were in compliance with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.7 to 1.0.

The agreements governing our debt obligations do not contain credit rating triggers that would result in the acceleration of interest, principal or other payments solely in the event that our credit ratings are downgraded. However, any downgrades in the credit ratings of our senior unsecured debt ratings to below investment grade ratings could, among other things, increase the applicable interest rates and other fees payable under the MPLX Credit Agreement and may limit our ability to obtain future financing, including refinancing existing indebtedness.

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Our liquidity totaled $4.5 billion at June 30, 2021 consisting of:


	June 30, 2021
(In millions)	Total Capacity		Outstanding Borrowings		Available Capacity
Bank revolving credit facility due 2024(1)	$	3,500	$	—	$	3,500

MPC Loan Agreement	1,500		(493)		1,007
Total liquidity	$	5,000	$	(493)	4,507
Cash and cash equivalents					8
Total liquidity					$	4,515

(1) Outstanding borrowings include less than $1 million in letters of credit outstanding under this facility.

We expect our ongoing sources of liquidity to include cash generated from operations and borrowings under the MPC Loan Agreement, the MPLX Credit Agreement and access to capital markets. We believe that cash generated from these sources will be sufficient to meet our short-term and long-term funding requirements, including working capital requirements, capital expenditure requirements, contractual obligations, and quarterly cash distributions. We may also, from time to time, repurchase notes or preferred shares in the open market, in privately negotiated transactions or otherwise in such volumes, at market prices and upon such other terms as we deem appropriate. MPC manages our cash and cash equivalents on our behalf directly with third-party institutions as part of the treasury services that it provides to us under our omnibus agreement. From time to time, we may also consider utilizing other sources of liquidity, including the formation of joint ventures or sales of non-strategic assets.

Equity and Preferred Units Overview

Common units

The table below summarizes the changes in the number of units outstanding through June 30, 2021:


(In units)
Balance at December 31, 2020															1,038,777,978
Unit-based compensation awards															183,111
Units redeemed in Unit Repurchase Program															(11,929,998)

Balance at June 30, 2021															1,027,031,091

Distributions

We intend to pay a minimum quarterly distribution to the holders of our common units of $0.2625 per unit, or $1.05 per unit on an annualized basis, to the extent we have sufficient cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our general partner. The amount of distributions paid under our policy and the decision to make any distributions is determined by our general partner, taking into consideration the terms of our partnership agreement. Such minimum distribution would equate to $270 million per quarter, or $1,078 million per year, based on the number of common units outstanding at June 30, 2021. On July 27, 2021, we announced the board of directors of our general partner had declared a distribution of $0.6875 per unit that will be paid on August 13, 2021 to unitholders of record on August 6, 2021. This is consistent with the prior quarter distribution. This rate will also be received by Series A preferred unitholders. Although our partnership agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit.

Series B preferred unitholders are entitled to receive a fixed distribution of $68.75 per unit, per annum, payable semi-annually in arrears on February 15 and August 15, or the first business day thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a

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floating annual rate equal to the three-month LIBOR plus 4.652 percent, in each case assuming a distribution is declared by the Board of Directors. Accordingly, a cash distribution payment totaling $21 million will be paid to Series B unitholders on August 16, 2021.

The allocation of total quarterly cash distributions is as follows for the three and six months ended June 30, 2021 and 2020. MPLX’s distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions were earned.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per unit data)	2021		2020		2021		2020
Distribution declared:
Limited partner units - public	$	260	$	270	$	522	$	540
Limited partner units - MPC	445		445		890		903




Total LP distribution declared	705		715		1,412		1,443
Series A preferred units	21		21		41		41
Series B preferred units	10		10		21		21
Total distribution declared	736		746		1,474		1,505

Cash distributions declared per limited partner common unit	$	0.6875	$	0.6875	$	1.3750	$	1.3750

Capital Expenditures

Our operations are capital intensive, requiring investments to expand, upgrade, enhance or maintain existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and growth capital expenditures. Examples of maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows. In contrast, growth capital expenditures are those incurred for capital improvements that we expect will increase our operating capacity to increase volumes gathered, processed, transported or fractionated, decrease operating expenses within our facilities or increase operating income over the long term. Examples of growth capital expenditures include the acquisition of equipment or the construction costs associated with new well connections, and the development of additional pipeline, processing or storage capacity. In general, growth capital includes costs that are expected to generate additional or new cash flow for MPLX.

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Our capital expenditures are shown in the table below:


	Six Months Ended June 30,
(In millions)	2021		2020
Capital expenditures:
Growth capital expenditures	$	155	$	469
Growth capital reimbursements	—		—
Investments in unconsolidated affiliates	84		222
Return of capital	—		(110)

Capitalized interest	(10)		(23)
Total growth capital expenditures	229		558
Maintenance capital expenditures	46		67
Maintenance capital reimbursements	(17)		(20)
Total maintenance capital expenditures	29		47

Total growth and maintenance capital expenditures	258		605
Investments in unconsolidated affiliates(1)	(84)		(222)
Return of capital(1)	—		110

Growth and maintenance capital reimbursements(2)	17		20
Decrease in capital accruals	34		172
Capitalized interest	10		23
Additions to property, plant and equipment, net(1)	$	235	$	708

(1) Investments in unconsolidated affiliates, return of capital and additions to property, plant and equipment, net are shown as separate lines within investing activities in the Consolidated Statements of Cash Flows.

(2) Growth and maintenance capital reimbursements are included in the “Contributions from MPC” line within financing activities in the Consolidated Statements of Cash Flows.

Contractual Cash Obligations

As of June 30, 2021, our contractual cash obligations included long-term debt, finance and operating lease obligations, purchase obligations for services and to acquire property, plant and equipment, and other liabilities. During the six months ended June 30, 2021, our third-party long-term debt obligations decreased by $925 million, primarily due to the redemption of $750 million outstanding aggregate principal amount of 5.250 percent senior notes due January 15, 2025 discussed above as well as net repayments on the MPLX Credit Agreement, partially offset by increased borrowings on the MPC Loan Agreement. There were no other material changes to our contractual obligations outside the ordinary course of business since December 31, 2020.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under U.S. GAAP. Our off-balance sheet arrangements are limited to indemnities and guarantees that are described in Note 21. Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance sheet arrangements to have a material adverse effect on our liquidity and capital resources.

TRANSACTIONS WITH RELATED PARTIES

At June 30, 2021, MPC owned our non-economic general partnership interest and held approximately 63 percent of our outstanding common units.

Excluding revenues attributable to volumes shipped by MPC under joint tariffs with third parties that are treated as third-party revenues for accounting purposes and excluding losses for impairment of equity method investments, MPC accounted for 47 percent and 54 percent of our total revenues and other income for the second quarter of 2021 and 2020, respectively. We provide crude oil and product pipeline transportation services based on regulated tariff rates and storage services and inland marine transportation based on contracted rates.

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Of our total costs and expenses, excluding impairment expense, MPC accounted for 27 percent and 32 percent for the second quarter of 2021 and 2020, respectively. MPC performed certain services for us related to information technology, engineering, legal, accounting, treasury, human resources and other administrative services.

For further discussion of agreements and activity with MPC and related parties see Item 1. Business in our Annual Report on Form 10-K for the year ended December 31, 2020 and Note 5 of the Notes to Consolidated Financial Statements in this report.

ENVIRONMENTAL MATTERS AND COMPLIANCE COSTS

We have incurred and may continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations. If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected. We believe that substantially all of our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including, but not limited to, the age and location of its operating facilities.

As of June 30, 2021, there have been no significant changes to our environmental matters and compliance costs since our Annual Report on Form 10-K for the year ended December 31, 2020.

CRITICAL ACCOUNTING ESTIMATES

As of June 30, 2021, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2020.

ACCOUNTING STANDARDS NOT YET ADOPTED

While new financial accounting pronouncements will be effective for our financial statements in the future, there are no standards that have not yet been adopted that are expected to have a material impact on our financial statements. Accounting standards are discussed in Note 2 of the Notes to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks related to the volatility of commodity prices. We employ various strategies, including the potential use of commodity derivative instruments, to economically hedge the risks related to these price fluctuations. We are also exposed to market risks related to changes in interest rates. As of June 30, 2021, we did not have any open financial derivative instruments to economically hedge the risks related to interest rate fluctuations or commodity derivative instruments to economically hedge the risks related to the volatility of commodity prices; however, we continually monitor the market and our exposure and may enter into these arrangements in the future. While there is a risk related to changes in fair value of derivative instruments we may enter into, such risk is mitigated by price or rate changes related to the underlying commodity or financial transaction.

Commodity Price Risk

The information about commodity price risk for the three and six months ended June 30, 2021 does not differ materially from that discussed in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our Annual Report on Form 10-K for the year ended December 31, 2020.

Outstanding Derivative Contracts

We have a natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachian region expiring in December 2022. The customer has the unilateral option to extend the agreement for two consecutive five-year terms through December 2032. For accounting purposes, the natural gas purchase commitment and the term extending options have been aggregated into a single compound embedded derivative. The probability of the customer exercising its options is determined based on assumptions about the customer’s potential business strategy decision points that may exist at the time they would elect whether to renew the contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing and the probability of the producer customer exercising its option to extend. The changes in fair value are recorded in earnings through “Purchased product costs” on the Consolidated Statements of Income. As of June 30, 2021 and December 31, 2020, the estimated fair value of this contract was a liability of $102 million and $63 million, respectively.

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Open Derivative Positions and Sensitivity Analysis

As of June 30, 2021, we have no open commodity derivative contracts. We evaluate our portfolio of commodity derivative instruments on an ongoing basis and add or revise strategies in anticipation of changes in market conditions and in risk profiles.

Interest Rate Risk

Sensitivity analysis of the effect of a hypothetical 100-basis-point change in interest rates on long-term debt, excluding finance leases, is provided in the following table. Fair value of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table.


(In millions)	Fair value as of June 30, 2021(1)		Change in Fair Value(2)		Change in Income Before Income Taxes for the Six Months Ended June 30, 2021(3)
Long-term debt (including amounts due within one year)
Fixed-rate	$	20,838	$	1,953	N/A
Variable-rate	$	1,000	$	12	$	7

(1) Fair value was based on market prices, where available, or current borrowing rates for financings with similar terms and maturities.

(2) Assumes a 100-basis-point decrease in the weighted average yield-to-maturity at June 30, 2021.

(3) Assumes a 100-basis-point change in interest rates. The change to net income was based on the weighted average balance of all outstanding variable-rate debt for the six months ended June 30, 2021.

At June 30, 2021, our portfolio of long-term debt consisted of fixed-rate instruments and variable-rate instruments including fixed rate senior notes, floating rate senior notes and our revolving credit facility. The fair value of our fixed-rate debt is relatively sensitive to interest rate fluctuations. Our sensitivity to interest rate declines and corresponding increases in the fair value of our debt portfolio unfavorably affects our results of operations and cash flows only when we elect to repurchase or otherwise retire fixed-rate debt at prices above carrying value. Interest rate fluctuations generally do not impact the fair value of borrowings under our bank revolving credit facility, but may affect our results of operations and cash flows. As of June 30, 2021, we did not have any financial derivative instruments to hedge the risks related to interest rate fluctuations; however, we continually monitor the market and our exposure and may enter into these agreements in the future.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) was carried out under the supervision and with the participation of management, including the chief executive officer and chief financial officer of our general partner. Based upon that evaluation, the chief executive officer and chief financial officer of our general partner concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, 2021, the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – Other Information

Item 1. Legal Proceedings

We are the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. While it is possible that an adverse result in one or more of the lawsuits or proceedings in which we are a defendant could be material to us, based upon current information and our experience as a defendant in other matters, we believe that these lawsuits and proceedings, individually or in the aggregate, will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Item 103 of Regulation S-K promulgated by the SEC requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $300,000.

Except as described below, there have been no material changes to the legal matters previously disclosed in our Annual Report on Form 10-K.

Dakota Access Pipeline

On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the Army Corps appealed the D.D.C.’s orders to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. On January 26, 2021, the Court of Appeals upheld the D.D.C.’s order vacating the easement while the Army Corps prepares the EIS. The Court of Appeals reversed the D.D.C.’s order to the extent it directed that the pipeline be shutdown and emptied of oil. On May 21, 2021, the D.D.C. denied a renewed request for an injunction. On June 22, 2021, the D.D.C. issued an order dismissing without prejudice the tribes’ claims against Dakota Access. The judge noted that the plaintiffs may move to reopen the case in the event of a violation of the court’s prior orders. The pipeline remains operational.

If the pipeline is temporarily shut down pending completion of the EIS, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. MPLX also expects to contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of June 30, 2021, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth a summary of our purchases during the quarter ended June 30, 2021, of equity securities that are registered by MPLX pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.


Period	Total Number of Units Purchased	Average Price Paid per Unit(1)		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Units that May Yet Be Purchased Under the Plans or Programs(2)
4/01/2021-4/30/2021	3,150,876	$	26.33	3,150,876	$	728,744,780
5/01/2021-5/31/2021	1,599,083	$	28.19	1,599,083	$	683,673,593
6/01/2021-6/30/2021	907,058	$	29.74	907,058	$	656,695,049
Total	5,657,017	$	27.40	5,657,017

(1)Amounts in this column reflect the weighted average price paid for units purchased under our unit repurchase authorization. The weighted average price includes commissions paid to brokers on shares repurchased under our unit repurchase authorization.

(2)On November 2, 2020, we announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s common units held by the public. This unit repurchase authorization has no expiration date.

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Item 6. Exhibits

Incorporated by Reference From

Exhibit
Number

Exhibit Description

Form

Exhibit

Filing Date

SEC File No.

Filed
Herewith

Furnished
Herewith

2.1†

Agreement and Plan of Merger, dated as of May 7, 2019, by and among Andeavor Logistics LP, Tesoro Logistics GP, LLC, MPLX LP, MPLX GP LLC and MPLX MAX LLC

8-K

2.1

5/8/2019

001-35714

3.1

Certificate of Limited Partnership of MPLX LP

S-1

3.1

7/2/2012

333-182500

3.2

Amendment to the Certificate of Limited Partnership of MPLX LP

S-1/A

3.2

10/9/2012

333-182500

3.3

Sixth Amended and Restated Agreement of Limited Partnership of MPLX LP, dated as of February 1, 2021

8-K

3.1

2/3/2021

001-35714

10.1

First Amendment to the Terminal Services Agreement , dated as of April 30, 2021, by and among the MPLX LP and Marathon Petroleum Corporation subsi diaries party thereto

10.2

Second Amendment to the Terminal Services Agreement , dated as of May 30, 2021, by and between the MPLX LP and Marathon Petroleum Corporation subsidiaries party thereto

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS

XBRL Instance Document: The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

† The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MPLX LP

	By:	MPLX GP LLC
		Its general partner

Date: August 4, 2021	By:	/s/ C. Kristopher Hagedorn
		C. Kristopher Hagedorn
		Vice President and Controller of MPLX GP LLC (the general partner of MPLX LP)